California Bans Hidden Charges: New Law Requires All-Inclusive Pricing Starting July 1st

Beginning July 1, thousands of restaurants and businesses in California will no longer be allowed to impose additional charges such as service fees, resort fees, surcharges, or “junk fees.” Instead, these expenses will need to be included in the initial price of goods and services, including food, drinks, and anything else being sold. Fees that are optional, such as tips, may still be excluded from the displayed price. If businesses violate this new mandate, customers may be eligible for damages of at least $1,000. While some customer advocates support the measure, restaurant owners fear that increased menu prices as a result of the new regulation could lead to fewer customers, reduced revenue, and shorter work hours. However, delivery fees can still be charged at a fixed rate and cannot be calculated as a percentage to prevent surprise costs for customers at the end of an order. The impact of the new rule on California’s economy is uncertain, but dozens of other states have implemented similar legislation as part of a broader initiative promoted by the Biden administration. Some establishments in Washington, D.C., have faced legal action over misleading pricing practices. While some consumers find the lack of clarity regarding service fees frustrating, proponents of the legislation argue that it promotes fairness and transparency for all parties involved. Governor Gavin Newsom (D-CA) approved the legislation last year, with State Senator Bill Dodd (D-CA) hailing its passage as a victory for consumers.