Why did my restaurant bill have a surcharge on it?

In 2024 California banned drip pricing — advertising a price that leaves out fees you have no choice about. Two days before it took effect, restaurants were carved out of it. Both halves are worth knowing, because together they tell you exactly what a restaurant here is and is not allowed to do.

What was banned

SB 478 added Civil Code 1770(a)(29), effective 1 July 2024. It makes it unlawful to advertise, display or offer "a price for a good or service that does not include all mandatory fees or charges," with only two exceptions: government taxes on the transaction, and actual shipping. The Attorney General describes the target as drip pricing — "advertising a price that is less than the actual price that a consumer will have to pay."

Then the restaurants were carved out

SB 1524 was signed on 29 June 2024 as an urgency measure, taking effect immediately — two days before SB 478 was due to bite. It inserted an exemption for "a mandatory fee or charge for individual food or beverage items sold directly to a customer by a restaurant, bar, food concession, grocery store, or grocery delivery service."

So a 4% surcharge on top of menu prices is legal in California. But the exemption comes with a condition, and the condition is the part that protects you.

'Conspicuous' now has teeth

From 1 July 2025 the phrase is measured against the definition in Civil Code 1791(u): larger type than the surrounding text, or contrasting type, font or color, or set off by symbols — "in a manner that clearly calls attention to the language."

In plain terms: a surcharge buried in the same small grey type as everything else at the bottom of the menu does not meet the standard. It has to stand out, and it has to explain itself.

A service charge is not a tip

This is the part that costs servers money and diners goodwill. Labor Code 351 makes every gratuity the sole property of the employee it was left for. But the Labor Commissioner's own guidance says a service charge "may be considered a gratuity (tip) ... or not depending upon whether the specific facts show the charge is perceived and intended by a customer to be a gratuity."

There is no bright line. A mandatory service charge can lawfully go to the house rather than to your server unless the restaurant says otherwise. A tip you write in yourself is unambiguously the employee's.

Delivery is different

Ordering delivery direct from a restaurant, the delivery fee does not have to be in the advertised food price — the Attorney General treats it as a separate service. Third-party platforms are not covered by the restaurant carve-out and must advertise the full all-in price of the delivery service.