Washington State

Office of the Attorney General

Attorney General

Bob Ferguson

FOR IMMEDIATE RELEASE: 
Jun 23 2015

Charges described as benefitting employees must go to workers
 
OLYMPIA — Washington State Attorney General Bob Ferguson released guidelines today for businesses considering adding surcharges in the wake of changes in minimum wage laws in several local jurisdictions in Washington, including Seattle and SeaTac. The guidelines make clear that, in general, businesses can legally add such surcharges as a way to cover their costs, but must do so in a way that is not unfair or deceptive.
 
“I am committed to promoting a fair, competitive marketplace and protecting consumers from deceptive practices,” said Ferguson. “Business owners want to comply with the law, but sometimes they have questions about how to do so. These guidelines will help businesses that choose to add a surcharge do so lawfully.”
 
The Attorney General released the guidelines following reports that some Seattle-area businesses, restaurants in particular, were adding a surcharge in response to new minimum wage laws.
 
According to the Attorney General’s Office, businesses that add a surcharge must:

  • Conspicuously disclose the charge;
  • Make the disclosure clear and easy to understand;
  • Not mischaracterize the charge as a tax or government mandate; and
  • Not misappropriate or use the funds for a purpose other than as described to the customer.

“Businesses are legally permitted to impose surcharges related to minimum wage increases,” Ferguson noted.  “But if they choose to do so, my office will ensure that workers get the benefit as advertised and consumers have the information they need to understand the full price of goods and services.”
 
Protecting consumers is part of the Attorney General’s responsibilities under state law. The Attorney General’s Consumer Protection Division works to secure a marketplace free from deceptive and unfair practices by enforcing the law and providing information and education to consumers and businesses.
 
“The Attorney General’s guidelines are an important reminder that surcharges described as helping cover employee wages or benefits should be going to that purpose,” said David Rolf, who served as co-chair of the City of Seattle’s Income Inequality Advisory Committee and is President of SEIU 775. “The Attorney General’s guidelines provide clear principles for business conduct and will help make sure workers are aware of potentially unfair practices.”
 
“This information makes clear that surcharges are an option for businesses, but that it is good to be upfront with customers if they are being charged,” said founder and chair of Seattle Hospitality Group Howard Wright, who also served as co-chair of Seattle’s Income Inequality Advisory Committee. “I appreciate the Attorney General making this resource available to businesses and the office’s thoughtful approach to this issue.”
 
The information from the Attorney General’s Office also includes guidance from the Washington State Department of Revenue that the surcharge is subject to the state’s business and occupation tax and retail sales taxes. The Attorney General brings action on behalf of the Department of Revenue to enforce the state’s tax laws.

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The Office of the Attorney General is the chief legal office for the state of Washington with attorneys and staff in 27 divisions across the state providing legal services to roughly 200 state agencies, boards and commissions. Attorney General Bob Ferguson is working hard to protect consumers and seniors against fraud, keep our communities safe, protect our environment and stand up for our veterans. Visit www.atg.wa.gov to learn more.

CONTACT: Peter Lavallee, Communications Director, (360) 586-0725; PeterL@atg.wa.gov