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California restaurants will still have to follow new rules regarding fees, but don't have to include them in the initial price.

Restaurant surcharges are officially an exception to the California junk fee law

Calif. Gov. Gavin Newsom signed the bill exempting restaurants from The False Advertising Law, which goes into effect July 1.

Restaurants are officially exempt from California’s SB 478 bill, the False Advertising Law, which bans businesses from charging hidden fees that are not included in the initial price given to customers. Calif. Gov. Gavin Newsom signed the exemption, SB 1524, into law on Saturday, June 29 — just two days before the junk fee ban went into effect on July 1.

Although the law allows restaurants the opportunity to tack on service fees and gratuities to the price of a meal, the exemption to the junk fee law requires that restaurants be upfront with any service charges or fees outside of the listed menu prices on the restaurant menu: no surprise charges at the end of the meal allowed.

“With today’s signing we can uphold the principle of providing consumers with up-front price transparency without inadvertently harming food service workers or small businesses,” Calif. State Sen. Bill Dodd, who first introduced the exemption to SB 478, said in a statement. “This new law will require clear, conspicuous disclosure of any fee, and a description of its purpose, on all advertisements, menus or other displays that contain the price of a food or beverage item. Now we can ensure restaurant customers are not shocked when they get their checks.”

The last-minute legislation was created and approved in response to criticism of the original junk fee ban bill by the restaurant industry, and this new update is supported by the California Restaurant Association.

The exemption only applies to food or beverage items sold directly to consumers by a restaurant, bar, food concession, grocery store, grocery delivery service, banquet, or catering service. Foodservice businesses must display all service fees/surcharges “with an explanation of purpose” via an advertisement, menu or other display within a year of the law’s implementation.

Contact Joanna at [email protected]

TAGS: Operations
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