Newsom Signs Urgent Legislation to Exempt California Restaurants From Service Fees Ban

A 2023 law made it illegal to impose surcharges on concert ticket prices, hotel rooms, or the now-exempt restaurant bills.

A waiter carries food at a restaurant in Newport Beach, Calif., on Sept. 9, 2020. John Fredricks/The Epoch Times

An emergency bill in California, signed into law by Gov. Gavin Newsom Saturday, will allow restaurants and bars to include fees and surcharges if they are disclosed to customers, providing relief from a bill passed in 2023 that went into effect July 1.

Last year’s bill, Senate Bill 478, made it illegal to impose hidden fees or surcharges in the dining industry as well as in transactions like concert ticket prices or hotel rooms.

However, concerns from California restaurants spurred the bill’s author, Democrat Sen. Bill Dodd, to write an emergency measure for that industry.

“The new proposal makes clear that any mandatory gratuity, service charge or other fee charged by restaurants must be displayed conspicuously on restaurant menus,” Mr. Dodd said in a June 24 press release.

The measure, Senate Bill 1524, also excludes grocery and delivery services, catering services, and food concession stands.

The California Restaurant Association, which provides support for restaurants through advocacy and business membership, opposed SB 478, accusing it of threatening the industry by suggesting the law’s interpretation would “disrupt restaurant operations throughout the state.”

The organization recognized the signing of the emergency measure as a victory and thanked lawmakers for clarifying the text regarding the dining industry.

“The California Restaurant Association thanks the Legislature and Governor for passing and signing SB 1524 into law, recognizing the needs of restaurants and catering businesses to have flexible pricing models,” said Matthew Sutton, the organization’s senior vice president of government affairs and public policy.

Mr. Sutton said SB 1524 will help restaurant workers “because many restaurants have switched to service charge models that enable more equitable pay for staff and help finance more benefits.”

The restaurant association emphasized the “increasing trend” toward such models in California “to help fund non-mandatory benefits” to restaurant staff.

Mr. Dodd did not respond to a request for comment.