Restaurant fees in California could still be legal as long as fees displayed 'clearly and conspicuously'

SACRAMENTO, Calif. - A California lawmaker is pushing to allow restaurants to charge service fees to diners.

A bill introduced Thursday by state Sen. Bill Dodd (D-Napa) could potentially reverse part of a controversial state law that will otherwise make them illegal in just three weeks, the San Francisco Chronicle reported.

A service fee could be a tip, or an extra cost, like a worker healthcare or downtown business fee. 

"Restaurant customers shouldn’t be surprised when they get their checks by a boatload of extra charges they’re not expecting," Dodd wrote in a statement. "Many restaurants are upfront with their business practices but too many aren’t, necessitating action. This proposal will level the playing field for all restaurants and address confusion and disagreement about what is permissible under state law."

Senate Bill 1524 – which Dodd described as an "urgency measure" – would merely require restaurants to disclose any additional fees, such as automatic service charges, "clearly and conspicuously" on menus or "other displays," as is current practice for many food businesses.

The new proposal makes clear that any mandatory gratuity, service charge or other fee charged by restaurants must be displayed conspicuously on restaurant menus. For example, if a restaurant adds a 20% security fee to all bills, that 20% charge must be clearly stated up front on the menu. It cannot be a surprise that only shows up when the bill arrives, Dodd's office said.

SB 1524 is co-authored by Sen. Scott Wiener, (D-San Francisco)  Assembly members Jesse Gabriel, (D-Encino); Cecilia Aguiar-Curry, (D-Winters); and Matt Haney, (D-San Francisco). It is supported by the California Restaurant Association and the Unite Here labor union.

Dodd's measure is meant to clarify how Senate Bill 478, the state’s new "junk fees" law that passed last year and is set to take effect on July 1. That bill bans businesses from charging hidden fees or burying added costs to artificially lower prices, such as for concert tickets or hotel rooms.

Dodd also co-authored SB 478. 

The California attorney general’s office said in April that the junk fees law would apply to surcharges at restaurants, ending months of confusion on the subject. 

But Dodd’s new legislation would create an exemption for restaurants, declaring that the hidden fees ban does not apply to food or beverage items sold by a "restaurant, bar, or other food service provider," including banquet or catering services, as long as any mandatory fees are transparently listed.