How SB 478, California’s Junk Fee Ban, Will Impact Restaurants

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On July 1, 2024, California’s sweeping junk fee ban goes into effect and will likely reshape the state’s restaurant and bar scene in major ways. Senate Bill 478 aims to crack down on so-called junk fees, the surcharges most often associated with hotel, car rental, and ticket sale companies, which have become the target of the Biden-Harris administration and California Attorney General Rob Bonta, who co-sponsored SB 478 along with Northern California legislators Senator Nancy Skinner (D-Oakland) and Senator Bill Dodd (D-Napa).

But the California legislation doesn’t just do away with resort fees and service charges from ticket sellers. On May 8, the California Attorney General’s Office released a much-anticipated frequently asked questions list about the law, which addressed specifically how it will impact restaurants, bars, and other food businesses that charge mandatory service fees. At restaurants and bars, these fees often supplement or replace voluntary gratuities and can serve to address long-standing inequalities that result from the tipping system in America. In some cities including San Francisco, fees are commonly used to offset the cost of a city mandate to set aside funds for employee health care.

Under the new law, however, restaurants and bars will not be able to add these charges to customers’ bills. As a result, many business owners say they’ll have to raise prices. Others who’ve been using mandatory service fees in place of tips now say they may need to revert to a tipping system — despite the fact that tipping can encourage racism, sexism, harassment, and exploitation. No matter how owners proceed, the law’s implementation marks a watershed moment for the state’s restaurant and bar industry.

Read through Eater’s coverage to understand how California’s junk fee ban could reshape the state’s dining scene.

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