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Restaurants in New York City can charge diners a fee of up to 10 percent of the total bill for in-person dining under new legislation passed by the City Council on Wednesday. The “COVID-19 Recovery Charge” aims to offset losses businesses have suffered since the start of the health crisis in March. The surcharge will be permitted until 90 days after full indoor dining resumes. Gov. Andrew Cuomo this month said indoor dining can reopen on September 30 at 25 percent capacity.
Council Member Joe Borelli, who sponsored the bill, said the fee will help restaurants cover labor and compliance costs and stay in business. Borelli, who represents parts of Staten Island, said he plans to push for the temporary measure to become permanent, similar to a bill he introduced two years ago.
“Restaurants in New York City have been getting crushed by massively increasing costs over the last five years and their options for increasing revenue have been narrowing,” Borelli said in a statement. “This new policy is coming as a result of the impact of Covid-19 on our city but I have every intention of making this change permanent.”
The new fee, which can be up to 10 percent of the total bill, must be clearly disclosed on all menus and on bills. Extra revenue can be put towards anything the restaurant owner decides, which is why a number of Council Members voted against the measure.
Council Member Brad Lander on Wednesday voted no because the legislation does not require a minimum wage or that the added revenue be shared with restaurant workers. Lander said the fee could cut into tips if diners see the surcharge as a replacement for tips.
“Restaurant workers making a subminimum wage, reliant on tips, will likely lose out with this surcharge in place,” Lander said in a tweet. “We could have required it to be shared with them, or only allowed it where workers make the full minimum wage. I hope we can in future.”
One Fair Wage, a national group representing workers in the service industry, said the surcharge does not go far enough to support restaurant workers who rely on tips.
“The surcharge is a good idea,” Saru Jayaraman, president of One Fair Wage, said in a statement. “But it won’t work if the restaurants that apply the surcharge aren’t paying their workers a minimum wage, as it would have cut into the already-reduced customer tips of these same workers who are already facing financial catastrophe.”
Council Speaker Corey Johnson on Wednesday said he would be willing to support a permanent surcharge in the next legislation, only if there were protections for workers included.
The fee, while not mandatory, applies to both indoor and outdoor dining. According to the bill, the fee will only be charged at restaurants “that feel it is necessary to apply to their bills.”
“The passage of the Covid-19 recovery bill will help struggling restaurants generate additional revenue to help pay for expenses like PPE for their employees, outdoor dining setups, rent, labor and other expenses to give them a fighting chance of survival,” Andrew Rigie, executive director of the NYC Hospitality Alliance, said. “We commend the City Council for passing this important temporary legislation and urge Mayor de Blasio to sign it into law immediately.”
The measure approved by the Council on Wednesday will take effect immediately after Mayor Bill de Blasio, who said he supports the legislation, signs it into law.
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