OLYMPIA — Washington State Attorney General Bob Ferguson recently released guidelines 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.”
“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.”
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.
