California Junk Fee Law Will Ban All Surcharges at Restaurants Including Credit Card Fees and Health Insurance Levies

A cocktail at the Tonga Room and Hurricane Bar at the Fairmont Hotel in San Francisco
Following months of uncertainty, the California attorney general’s office confirmed that a new California law that bans junk fees does in fact apply to surcharges at restaurants.
The news comes after the California Restaurant Association and Golden Gate Restaurant Association in San Francisco had lobbied for months to clarify what the law means for the industry, from automatic service charges to private dining fees.
The change goes into effect on July 1, 2024. Under SB478, California restaurants will no longer be able to charge service fees, charges which have been an increasingly common tool used to cover the cost of higher wages for employees as businesses in the food industry move away from a reliance on tips. Such operations must fold these fees into the menu price of items, the attorney general’s office said.
The law applies to all fees other than taxes and that renders void San Francisco’s ordinance that allows businesses to add health care or credit card processing fees to bills.
“SB 478 applies to restaurants, just like it applies to businesses across California,” a Department of Justice spokesperson wrote in an emailed statement to Frequent Business Traveler and The Travelist. “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.”
The law does not, however, apply to food delivery platforms such as Uber Eats and DoorDash. Such entities do not have to “include in the menu price shown to the consumer the fees it charges for providing its services,” as stated in the bill’s text.
SB478 prohibits businesses from charging “junk fees,” or burying added costs to give the selling price an artificially low appearance. This also applies to sellers of concert tickets or to hotel chains.
The bill was co-authored by the attorney general’s office and two Bay Area senators, Senator Nancy Skinner and Senator Bill Dodd.
(Photo: Accura Media Group)