New California law will ban restaurant surcharges on customer bills, other fees

Restaurant surcharges will soon be illegal in California as a new law, aimed at banning hidden fees, takes effect in July, according to the office of State Attorney General Rob Bonta.

Starting July 1, under SB478, California restaurants will no longer be able to charge service fees and must instead fold them into menu prices.

“SB 478 applies to restaurants, just like it applies to businesses across California,” a Department of Justice spokesperson told the San Francisco Chronicle. “The law is about making sure consumers know what they are going to pay and requires that the posted price include the full amount that a consumer must pay for that good or service.”

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KTLA reached out to the state attorney general office but didn’t hear back in time for publication.

The new law, authored by Sen. Nancy Skinner, D-Berkeley, and Sen. Bill Dodd, D-Napa, prohibits businesses from charging “junk fees” or burying added costs to artificially lower prices, a practice commonly seen across various industries.

The legislation was also sponsored by Bonta when it was first introduced.

“Californians are fed up with being bombarded by junk fees that, more and more, are making it unaffordable to attend a concert, go to a sporting event, take a vacation, or stay at a hotel,” Skinner said in a press release. “Our legislation will bring transparency to the true cost of goods and services in our state so that Californians know upfront exactly how much they’re being asked to pay.”

However, leaders in the food industry worry that the new law will significantly impact the restaurant industry in California, resulting in price hikes for consumers and pay cuts for employees.

The California Restaurant Association disagrees with Bonta’s interpretation of the law.

“This legislation was promoted as a measure that would clarify, but not expand, the scope of current law,” President Jot Condie told the publication. “Unfortunately, the Attorney General appears to have broader ambitions for this law than the legislators that wrote and passed it.”

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The new law comes after California’s fast-food law took effect in April. Under the new law, the minimum wage for fast-food workers increased from $16 per hour to $20, a move that prompted fast-food companies to raise prices to keep up with labor costs.

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