California’s Junk Fee Law and Restaurants

California's new junk fee law is set to come into effect July 1. As a refresher, the law prohibits "advertising, displaying, or offering a price for a good or service that does not include all mandatory fees or charges." There is no exception for restaurants, and the new law has caused quite a bit of consternation (and confusion) in that industry. The latest "clarification" was issued Tuesday, but it may not be the last.

Initially, there was concern that the law would ban mandatory service and other fees. Back in October, one of the bill's sponsors said "no" as long as the fees are disclosed. Shortly thereafter, however, the attorney general's (AG) office suggested that the bill might make such fees illegal. In addition, there was some speculation in industry circles that perhaps all the law would require is transparency with respect to any mandatory fees, i.e., clear disclosure of such fees on menus, etc.

The San Francisco Chronicle reported yesterday on an email from the AG's office, which appears to have confirmed the following:

• The law applies to restaurants and restaurant surcharges.
• Such surcharges aren't banned but they must be folded into the menu price.

The article provides the following quote from the email: "SB 478 applies to restaurants, just like it applies to businesses across California …. 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."

Stay tuned, however, because there are still two more months to go and rumor is that FAQs will be released soon.