Governor signs ‘junk fee’ ban into law

Gov. Tim Walz speaks ahead of signing a ban on 'junk fees' on May 20, 2024. Photo by Madison McVan/Minnesota Reformer.

Beginning next year, Minnesota businesses can no longer add service fees, health and wellness surcharges or other mandatory charges to customers’ bills at the end of a transaction.

Gov. Tim Walz signed the bill (HF3438) into law on Monday morning. It will take effect on Jan. 1  everywhere but metro area airports, which have until June 2025 to comply.

The bill’s authors say the measure will provide more transparency for consumers by forcing businesses to advertise the true price of a good or service, rather than listing a lower price while charging a significant service fee at the end of a transaction. 

“If you need to pay something to get a good or service, you just have to be told up front what it’s going to cost,” said Rep. Emma Greenman, DFL-Minneapolis, who authored the bill in the House. 

Restaurants and hotels may still charge a mandatory gratuity — which is different from service fees because the revenue goes directly to the workers, not to the employer — as long as the percentage is clearly advertised alongside any pricing information. “Health and wellness” charges or other fees added to restaurant bills would be banned, even if the proceeds are used to support wages and benefits for employees. 

“I think just giving transparency, giving some honesty about how these things are done, lets people make better informed decisions, which is better for their bottom line,” Walz said.

The bill does not apply to taxes, and companies may charge for the actual cost of shipping. The legislation contains exemptions for fees related to motor vehicle purchases, utilities and real estate transactions.

The legislation was the subject of around eight hours of debate in the final week of the legislative session, as House Republicans stretched out discussion of the bill to delay movement on any other legislation. Democrats expressed frustration at the lengthy debate, and party leaders called for reform of the House rules to limit debate — the norm in other states. 

Walz endorsed time limits on debate, which are typical in the U.S. House where he served, though not the U.S. Senate. “I do think there’s got to be parameters. I don’t think you can have unlimited debate where you just filibuster anything that goes,” Walz said.

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