Lawmakers want to crack down on “junk fees,” but restaurants are trying to stay out of the fray.

In recent years, surcharges or fees have become increasingly common on restaurant bills, covering everything from credit card processing to tips to “inflation.”

According to the National Restaurant Association, 15% of restaurant owners added surcharges or fees to bills last year due to higher costs. In the second quarter, 3.7% of restaurant transactions processed by Square included a service fee, more than double the amount in early 2022, according to a recent report from the company.

Opponents of the practice say these fees and surcharges can surprise customers and trick them into paying more for their meal when their wallets are already empty. Annoyed restaurant patrons have taken to Reddit to create spreadsheets of restaurants in Los Angeles, Chicago and DC that charge hidden fees. Even The Onion has spoken out about the practice, publishing a satirical story in May with the headline “Restaurant bill includes 3% surcharge to get owner’s sugar baby Birkin.”

The Biden administration has targeted so-called junk fees, such as an undisclosed service charge for concert tickets or unexpected resort fees when checking out of a hotel. In the fall, the Federal Trade Commission is expected to release a rule prohibiting companies from “charging hidden and deceptive fees.”

Restaurants are trying to avoid the Biden administration’s crosshairs, saying surcharges and fees are necessary to keep their businesses afloat and fairly compensate their employees in a competitive industry with razor-thin profit margins.

“The challenge for restaurants is that not all fees are junk fees… For most of the fees on a restaurant bill, people know what they are paying for,” said Sean Kennedy, executive vice president of public affairs for the National Restaurant Association.

Some customers may disagree with Kennedy.

While federal law prohibits management from keeping tips from their employees, mandatory service charges are the property of the restaurant. Some states, such as New York, have their own laws that state that service charges belong to the staff.

A Denver restaurant worker said in a public comment on the FTC’s proposed rules that his employer describes customer fees as “equally distributed among employees,” but when he was hired, he was told the company keeps 30 percent of the revenue.

Service fees increase the risk of wage theft because employers can claim the money goes to workers but fail to pay it, the National Women’s Law Center wrote in its public comment. Additionally, customers who pay a service charge are less likely to tip on top of the bill, hurting workers’ income, the nonprofit said.

Restaurant operators, on the other hand, argue that service charges and other surcharges help them pay their employees more and offer them better benefits.

When Galit, a Middle Eastern restaurant in Chicago, opened its doors in 2019, it added an optional 2% fee to cover its employees’ healthcare costs. Today, the fee is 4%, and the restaurant adds a 20% service charge to every bill for hourly workers. The fees are clearly stated on the website, Resy page, and menu.

Co-owner and general manager Andres Clavero, who has an accounting background, said the restaurant chose this approach for several reasons.

“We can dictate where everything goes, so part of our 20% service fee goes to the back of the house,” Clavero said.

Higher menu prices could also deter customers, and guests would have to pay higher sales tax. Galit would also have to pay higher payroll taxes. And the service charge is intended to solve the problem of tipping, a practice that has become increasingly controversial in recent years due to studies linking it to sexual harassment and racial discrimination.

If the fees were instead factored into restaurant prices, customers might choose cheaper options that don’t offer the same benefits to employees, Clavero says.

In some cases, fees help restaurants navigate tricky legal texts. For example, service fees became much more common in Washington, D.C., after voters passed Initiative 82, which would phase out tipping by 2027. In March, the city passed a law protecting service fees of 20% or less.

Kaliwa, a Southeast Asian restaurant in Washington, DC, said it introduced an 8% markup to manage rising labor and operating costs.

“Our priority is to remain transparent with our guests and ensure they understand the reasons behind these fees,” said Kaliwa Director Peter Demetri.

For Ming-Tai Huh, Square’s head of restaurant business and a partner in Cambridge Street Hospitality Group, service charges have helped some of his Boston restaurants pay their cooks and dishwashers more.

Massachusetts law prohibits servers from sharing tips with kitchen staff. Thanks to the higher pay provided by the bonuses, more of the restaurant company’s employees have opted into the health insurance program.

Huh said the service charge was easier to implement in the company’s upscale restaurants, but CSHG eventually eliminated it from a fast-casual restaurant because customers objected. Instead, the company simply raised menu prices.

At the state level, restaurants have already successfully freed themselves from the battle over junk fees.

In California, last-minute legislation exempted bars and restaurants — as well as grocery stores and food delivery services — from having to disclose the mandatory fees they charge customers. As a result, the industry was exempt from a sweeping anti-junk-fee law that took effect on July 1.

“We believe that by allowing the many restaurants that have used automatic gratuities instead of tips for decades (which is fairer and more equitable) and more recently charged service fees to offset things like the SF Health Care Security Ordinance, we will enable the many restaurants to continue to support pay equity and contribute to the health care of their employees,” the Golden Gate Restaurant Association wrote in a statement after the bill passed.

According to the National Restaurant Association, eliminating the fees would lead to customer confusion, higher prices, less transparency and costly compliance measures. The industry association estimates that the cost of new menus alone would be more than $4,800 per restaurant.

Even restaurant operators admit that not all fees and surcharges are worth protecting.

Clavero opposes restaurants charging Covid surcharges more than four years after the pandemic caused dining rooms to temporarily close.

“For me, this is a cry for help. It means not being completely open and honest about where your money is going,” he said.

For its part, the National Restaurant Association said it is urging the FTC to protect three fees that restaurants typically charge: large group fees, delivery and credit card processing.

Kennedy said the trade group is trying to help operators maintain their razor-thin 3 to 5 percent margins, which is difficult given the ever-increasing costs of doing business. For example, fees for credit card payments have doubled in the past decade and are now the third-highest cost for restaurants, according to Kennedy.

“We have really instilled in our members to be as open, transparent and public as possible so that customers know exactly what they are getting into when they sit down to eat at their favorite restaurant,” Kennedy said.