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10% dining surcharge to help struggling NYC restaurants approved by council

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Posted at 4:30 PM, Sep 16, 2020
and last updated 2020-09-17 12:03:42-04

NEW YORK CITY — New Yorkers may have to dig deeper into their pockets to enjoy indoor or outdoor dining in the city.

The New York City Council passed a bill Wednesday that allows restaurants to add a surcharge of up to 10% onto the bill of in-person diners. The surcharge does not apply to takeout or delivery orders.

Previous rules prohibited restaurants from charging fees other than listed food and drink prices.

The so-called COVID-19 Recovery Charge is meant to help restaurants struggling to survive amid coronavirus restrictions and indoor capacity limits.

Indoor dining in New York City is set to resume at 25% capacity on Sept. 30.

Andrew Rigie, executive director of the NYC Hospitality Alliance, lauded the bill’s passage as a victory for small business owners.

“New York City restaurants have been financially devastated, and it only makes matters worse that a 45-year-old regulation discriminates against only the restaurant industry by prohibiting these small businesses from having the option of using a clearly disclosed surcharge, if they so choose,” Rigie said in a statement. “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.”

However, not everyone in the service industry was on board with the legislation.

One Fair Wage, which represents restaurant workers, urged the council on Tuesday to reject the bill because it could lead to lost tips for servers making below minimum wage.

“While it is critical that we support New York City’s restaurant industry during this unprecedented crisis, we must not forget about the individual restaurant workers who have seen their lives adversely impacted by a severe loss of income over the past six months,” the organization said in a statement ahead of the vote. “If the City Council allows employers to add a surcharge, without these employers paying their workers a full minimum wage, the surcharge would cut into workers’ already-reduced customer tips without any guarantee of tipped restaurant workers receiving the bare minimum wage.”

The surcharge is not mandatory and restaurants who choose to use it must disclose the additional cost on menus and receipts.

The COVID-19 Recovery Charge is also temporary. The bill, approved in a 46-2 vote, mandates that it expire 90 days after indoor dining resumes at full capacity.

Mayor Bill de Blasio needs to sign the bill into law before restaurants can take advantage of the surcharge.