Bruno Katz (Partner-San Diego, CA) authored a white paper for the California Restaurant Association webpage on updates based on new legislation concerning the legality of surcharges and service fees. A new law signed by Governor Gavin Newsom prohibits businesses in California from advertising, displaying or offering “a price for a good or service that does not include all mandatory fees or other charges” other than taxes and shipping. SB 478 which the State of California has dubbed the “Hidden Fees Statute” or “Honest Pricing Law” went into effect on July 1, 2024. To clarify ambiguities and intent on SB 478, Bruno provided advice and counsel to the California Restaurant Association, which contributed to promoting an urgent piece of legislation, Senate Bill 1524, being signed into law and effective immediately that related to service fees and other surcharges imposed by restaurants, bars and other food service providers.

SB 1524 builds upon SB 478, which was aimed at preventing “drip pricing,” where consumers see an advertised price, but are subject to additional, undisclosed charges at purchase. SB 1524 allows restaurant surcharges, service fees and automatic gratuities to be used and remain legal so long as they are properly and clearly displayed on menus. Bruno’s insight provides guidance to the restaurant industry as to how to comply with the new law, including new requirements effective July 1, 2025, to avoid consumer class action lawsuits under the California’s Consumer Legal Remedies Act (CLRA) and California False Advertising statutes.