California restaurants can breathe a sigh of relief as they are now officially exempt from the state's new junk fee law, which went into effect on July 1st. Governor Gavin Newsom signed the exemption bill, SB 1524, just two days before the ban was set to begin.

What Does the Exemption Mean?

While the original junk fee law, SB 478, aimed to eliminate hidden fees and surcharges not included in the initial price given to consumers, the exemption specifically allows restaurants to continue adding service charges and gratuities to bills. However, this comes with a crucial requirement: restaurants must be transparent and disclose these fees upfront.

No More Surprise Charges

The exemption mandates that restaurants clearly display any service charges or fees on their menus, advertisements, or other displays where food or beverage prices are listed.  This means no more unexpected additions to your bill at the end of your meal.

Balancing Transparency and Industry Concerns

The last-minute exemption was crafted in response to concerns raised by the restaurant industry about the potential negative impact of the junk fee ban on workers and small businesses. State Senator Bill Dodd, who introduced the exemption, emphasized the importance of maintaining price transparency for consumers while protecting the interests of the food service industry.

Key Points for Restaurants

• Clear Disclosure:  Restaurants must clearly state any service charges or fees, along with an explanation of their purpose, on all relevant materials.

• Timeframe:  Businesses have one year from the implementation of the law to ensure compliance with the disclosure requirements.

• Broad Application: The exemption applies to a wide range of food service businesses, including restaurants, bars, food concessions, grocery stores, grocery delivery services, banquets, and catering services.

Industry Support

The California Restaurant Association has expressed support for the exemption, recognizing its importance in providing clarity for businesses and consumers alike.

What's Next?

While this exemption provides a welcome reprieve for restaurants, it remains to be seen how it will impact consumer behavior and the overall dining experience in California.  As the industry adapts to the new rules, diners can expect greater transparency and a more predictable billing process.