The California Senate passed a law saying that restaurants, bars, grocery stores and grocery delivery services will not have to list mandatory fees charged to consumers in the prices for individual items under the state’s forthcoming junk fee disclosure rules, which takes effect July 1. Those rules were announced by the Office of the Attorney General in California following the passage of SB-478 last year, as that law did not explicitly mention restaurants. 

The exemption applies only to those goods sold directly to consumers, and the law explicitly states that third-party delivery services must still obey the fee disclosure rule.

The rule does not exempt restaurants fully from disclosing service charges, mandatory gratuities or other fees. Previously, the guidance offered by the OAG required the listed price for any item to include the mandatory fees associated with it. Now the mandatory fees need only be displayed on advertisements, menus and displays. This means a restaurant charging an automatic gratuity need not list the cost of the gratuity with each menu item.

The bill, SB-1524, passed the state’s lower legislative chamber earlier this week, and heads to the desk of Gov. Gavin Newsom. SB-1524 passed by unanimous votes in both chambers, though one state senator and six assembly members did not vote, state records show.

The Golden Gate Restaurant Association applauded the passage of the law. 

“We believe that allowing the many restaurants who for decades have used auto gratuity instead of tips ... will make it possible for restaurants to continue to support pay equity and contribute to worker health care,” the association wrote.