Don’t Change Those Menus: New Legislation Exempts Restaurants from “Junk Fees” Law

As business finalize preparations to comply with SB 478 “Junk Fees” law, Senate Bill 1524— recently passed by the California Assembly and Senate and signed into law by Governor Gavin Newsom—creates an exemption for restaurants and other food-related businesses from the new inclusive pricing requirements.


SB 1524, an emergency measure introduced by Senator Bill Dodd—the same senator behind SB 478—was intended to prevent the comprehensive pricing transparency requirements of SB 478 from applying to restaurants, bars, food concessions, grocery stores, grocery delivery services, and menus or contracts for banquet or catering services. Now that it has been enacted, prices on restaurant, room service and food delivery menus and point-of-sale systems will not be required to display all-inclusive pricing. This measure comes in response to concerns raised by the restaurant industry about the practicality and impact of the new pricing rules on their operations.


The push to pass SB 1524 was unprecedented and extraordinarily swift. Last week, on June 25, the California Assembly unanimously approved the bill, and two days later, on June 27, it passed the Senate as well. Governor Gavin Newsom signed the measure over the weekend. Given the tight timeline, with the compliance deadline for SB 478 looming on July 1, the legislature’s expedited efforts highlight the urgency of addressing industry concerns.


For restaurants and other affected businesses, the enactment of SB 1524 means they can continue to apply mandatory service charges, gratuities, and other fees without including these in the advertised price of individual items, provided these fees are clearly disclosed to consumers before purchase. This approach offers flexibility in covering operational costs such as employee benefits, credit card fees, and other expenses without significantly raising menu prices.


The swift legislative movement surrounding SB 1524 reflects the significant impact these pricing laws have on the food and beverage industry. With its enactment, restaurants and other food-related businesses can breathe a sigh of relief.