What happens when those restaurant surcharges get 86'd on July 1?

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As of July 1, service charges will be banned from restaurant checks in California. Photo courtesy of Upsplash.

Have you eaten out and noticed an additional fee — ranging from 3% to 20% of the meal — on your bill? You're not alone. The spread of restaurant surcharges has rankled diners. California lawmakers dislike them, too. Earlier this year, they passed SB478 to put a stop to them. 

When the law goes into effect on July 1, 2024, it will require restaurants, hotels, Airbnb rentals, concert venues, and other vendors to list the full price of whatever consumers are paying for. No more "junk fees" surprising you when you get your final bill… unless you're ordering from a food delivery service. Apps such as DoorDash and Uber Eats are exempt from these rules.

San Francisco Chronicle reporter Elena Kadvany explains the ins and outs of the new "junk fees" law. She says that many restaurants were using these surcharges to close the pay gap between front-of-house and back-of-house employees. However, a few class action lawsuits have been filed in Los Angeles by restaurant workers who claim their employers weren't fairly distributing these service charges. 

In late April, California Attorney General Rob Bonta issued an FAQ confirming that restaurants can no longer add these surcharges to diners' bill although they can raise their prices. Restaurateurs, however, are scared of sticker shock. They worry that when consumers see the actual price of dishes, they'll revolt. So Senator Bill Dodd (D-Napa) has proposed a new bill that would let restaurants keep charging these fees as long as the surcharges are clearly spelled out on menus.