That California Junk Fee Bill: Are Restaurants Exempt?

Jul 02, 2024

To enhance consumer transparency and financial equity within California’s service industries, Senate Bill 478 was signed into law last October.  It intends to outlaw hidden fees across sectors such as hospitality, entertainment, and transportation starting July 1. However, as the deadline looms, the statewide measure has sparked significant debate, among restaurant owners reliant on service charges to supplement wages and maintain operational stability.

In a decisive move aimed at providing relief to California’s hospitality industry, lawmakers have unanimously approved Senate Bill 1524, an emergency measure that grants restaurants a crucial exemption from impending legislation set to ban hidden fees effective July 1. This legislative action comes amidst growing concerns within the restaurant community over the financial impacts of Senate Bill 478, which would have restricted establishments from imposing service charges without clear upfront disclosure.

Senate Bill 1524, pending Governor Gavin Newsom’s approval, is a step towards maintaining a balance between transparency and financial stability in the hospitality sector. It would allow restaurants to continue charging fees, as long as they are prominently displayed on menus. This careful consideration of the industry’s needs is a positive development.