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Restaurants Are Now Exempt From the California False Advertising Law

New legislation requires transparent pricing but exempts restaurants from hidden fee ban, supporting the food service industry.

California Governor Gavin Newsom signed SB 1524 into law on June 29, 2024, exempting restaurants from the False Advertising Law (SB 478). This law, effective July 1, bans businesses from charging hidden fees not included in the initial price given to customers.

The exemption allows restaurants to add service fees and gratuities but mandates full, upfront disclosure of these charges. This measure ensures customers are not surprised by unexpected charges at the end of their meal.

The legislation, introduced by California State Senator Bill Dodd, was created in response to criticism from the restaurant industry, particularly concerns about the potential harm to food service workers and small businesses. 

“With today’s signing, we can uphold the principle of providing consumers with up-front price transparency without inadvertently harming food service workers or small businesses,” Dodd said in a statement reported by Nation’s Restaurant News. “This new law will require clear, conspicuous disclosure of any fee, and a description of its purpose, on all advertisements, menus or other displays that contain the price of a food or beverage item.”

The California Restaurant Association supports this update, which aims to maintain price transparency while protecting the interests of the restaurant industry.

This exemption applies to various food service businesses, including restaurants, bars, food concessions, grocery stores, and catering services. For franchise restaurants, the new law underscores the importance of maintaining transparency and consistency in pricing practices across all locations, ensuring customer trust and compliance with state regulations.

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