California junk fee law to go into effect July 1, but will restaurants be exempt?

California restaurant surcharges will change in July

As of July 1, it will be illegal for any restaurant in the Golden State to add special surcharges to diners' checks, which has become a favorite method that restaurants use to lower costs and enhance employee incomes.

SACRAMENTO, Calif. - A new law designed to ban junk fees in California is set to go into effect on July 1. But an 11th hour, "urgency measure," that’s been making its way through the Legislature could allow restaurant surcharges to continue.

Senate Bill 478, signed into law by Governor Gavin Newsom last year, bars businesses of all types from adding undisclosed fees at the end of transactions.

The legislation, introduced by State Sen. Bill Dod, (D-Napa), has received opposition from groups including the California Restaurant Association.

SEE MORE NEW LAWS: New California laws go into effect on July 1

Earlier this month, Dodd introduced a new bill intended to clarify that law, saying it was in response to questions from California’s food and beverage industry about how the measure applies to restaurant charges.

SB 1524 would require restaurants to make clear that any mandatory gratuity, service charge or other fee must be displayed conspicuously on restaurant menus and cannot show up for the first time on the bill.

Dodd said the measure sought to enhance consumer protection at restaurants.

"Restaurant customers shouldn’t be surprised when they get their checks by a slew of extra charges they were not expecting," Sen. Dodd said. "This proposal will level the playing field for all restaurants and address confusion and disagreement about what is permissible under state law."

State Sen. Scott Wiener (D-San Francisco), a lead co-author of the bill, said the measure clarified sections of the existing junk fee law which posed a threat to the financial health of the state's restaurant industry.

"Restaurants are vital to the fabric of life in California, and they should be able to cover costs as long as they do so transparently," Wiener said. "The bill strikes the right balance between supporting restaurants and delivering transparency for consumers."

On Tuesday, a spokesperson for Dodd's office said the bill has been advancing through the Assembly committee process.

It could be adopted within the next month, according to Dodd’s office.

The measure carries an urgency statute which means if passed by the state Legislature and signed into law by the governor, it would go into effect immediately.