A California Lawmaker Pushes for Transparency in Restaurant Fees

By: Sam Watanuki | Published: Jun 07, 2024

California State Senator Bill Dodd introduced a bill on Thursday aimed at bringing transparency to restaurant service fees.

The bill, SB 1524, acts as an urgent measure that seeks to clarify existing laws and ensure diners are not surprised by unexpected charges.

Current Law and Its Limitations

Currently, Senate Bill 478 bans businesses from charging hidden fees. However, there has been confusion about whether this applies to restaurant service fees.

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SB 1524 aims to address this ambiguity by providing clear guidelines.

Details of SB 1524

The proposed bill requires restaurants to disclose any additional fees, such as automatic service charges, clearly on their menus or other displays.

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This includes any mandatory gratuity or service charge that diners need to be aware of upfront.

Example of Transparency

If a restaurant adds a 20% service fee to all bills, this fee must be clearly stated on the menu.

magnifying glass on black notebook

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This ensures that customers know exactly what they will be charged before they order, preventing any unpleasant surprises.

Support from Industry and Labor

SB 1524 has received support from the California Restaurant Association and the Unite Here labor union.

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These endorsements highlight the bill’s importance in promoting fair and transparent business practices in the restaurant industry.

Co-Authors of the Bill

The bill is co-authored by Senator Scott Wiener, and Assembly members Jesse Gabriel, Cecilia Aguiar-Curry, and Matt Haney.

A brown wooden gavel hitting down on a wooden block.

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Their support shows the widespread recognition of the need for this legislation within the California government.


Addressing the Junk Fees Law

Dodd’s measure aims to clarify the state’s new “junk fees” law, set to take effect on July 1. This law bans businesses from charging hidden fees, but there was confusion about its application to restaurants.

A person handing out their blue debit card.

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SB 1524 provides a clear exemption for food service providers.


Restaurant Industry Challenges

Many restaurants face high operational costs, including employee healthcare and business maintenance.

A large group of people sat around a table eating and drinking.

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Service fees help cover these expenses without significantly raising menu prices. However, transparency in these charges is crucial for maintaining customer trust.


Consumer Protection Focus

Sen. Dodd emphasized the need for honesty in pricing, stating, “Restaurant customers shouldn’t be surprised when they get their checks by a boatload of extra charges they’re not expecting.”

A customer paying at the cashier with a bank card

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This bill aims to protect consumers while allowing restaurants to remain viable.


Implementation and Compliance

If passed, SB 1524 will require restaurants to adapt their menus and billing systems to comply with the new transparency requirements.

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This could potentially involve additional staff training and investment in updated technology.


Potential Challenges and Criticisms

Some critics argue that even with transparency, service fees could still burden consumers.

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They worry that these fees might dissuade people from dining out, potentially impacting the restaurant industry negatively.


Looking Ahead

As California continues to innovate in legislation, SB 1524 will be closely watched by other states.

A group of men and women sat around a table eating food. There is food and wine on the table.

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Its success could set a precedent for how service fees are handled nationwide, promoting transparency and trust in the restaurant industry.