The state law that was set to take effect next month outlawing all "junk fees" charged to consumers, which was set to upend the practice of adding service and healthcare charges to restaurant checks, might be moot where restaurants are concerned.

State Senator Bill Dodd [D-Napa], one of the authors of the original bill, has responded to the outcry from the restaurant industry, and has introduced a late-session bill, SB 1524, that would "clarify" the earlier SB 478 and carve out an exception for restaurants. The only catch: Restaurants would have to "clearly and conspicuously" disclose any fees they charge on menus or "other displays," so they don't arrive as a surprise on diners' checks.

The new bill, which was co-authored by Sen. Scott Wiener and Assemblymember Jesse Gabriel [D-Encino], could supersede SB 478 as soon as it takes effect, allowing many Bay Area restaurants to continue charging fees that many owners say are necessary to covering their bottom lines — particularly in jurisdictions like San Francisco with expensive healthcare and minimum wage mandates on top of expensive rent.

"Restaurants are vital to the fabric of life in California, and they should be able to cover costs as long as they do so transparently," Wiener said in a release. "SB 1524 clarifies portions of the law that pose a serious threat to restaurants. The bill strikes the right balance between supporting restaurants and delivering transparency for consumers, and I’m proud to support it."

Speaking to the Chronicle, Dodd says that the new bill will still create a more even playing field, and make sure restaurants don't try to bury these feeds so customers don't notice them.

"Restaurant customers shouldn’t be surprised when they get their checks by a boatload of extra charges they’re not expecting," Dodd tells the paper. "Many restaurants are upfront with their business practices but too many aren’t, necessitating action."

To be fair, it's common for SF restaurants to disclose their service charges on menus, albeit usually in small print.

Consumers and food critics alike have griped about these extra charges, which date back over 16 years, pretty much since they first appeared, arguing that these costs ought to be folded into the prices of food drinks. But restaurant owners suggested there would be consumer revolt if they were charged the prices that would be necessary to eliminate the fees.

Tim Stannard of Bacchus Management Group (Spruce, La Connessa, Selby's) suggested that the necessary price hikes to cover the lost fees would look like "cocktails going from $16 to $26," which consumers wouldn't like either.

Last month, the California Restaurant Association, a lobbying group, tried to argue in a legal complaint that SB 478 referred to "goods and services," and that restaurant meals didn't count as either "goods" or "services" — but Attorney General Rob Bonta was quick to dismiss that line of argument.

The association celebrated the last-minute bill from the state Senate, with the group's Senior vice President Matthew Sutton issuing a statement saying, "This will enable restaurants to continue to support increased pay equity and to make contributions to worker health care and other employee benefits. And, importantly, consumers will remain empowered to make informed choices about where they choose to dine out."

Some restaurants in San Francisco were already preparing to comply with the law as written, including sister restaurants Liholiho Yacht Club and Good Good Culture Club. Those restaurants had notably shifted to a flat service-charge model in which the extra fee was spread among back- and front-of-house staff, enabling better wages for kitchen staff. The two restaurants have reverted back a traditional tipping model — something that is generally necessary for attracting experienced service staff — and raised prices around 8%, they said.

Tasting menu restaurant Anomaly announced this week that it would be complying with SB 478 by offering an all-inclusive price for its 11-course menu, $179 per person including gratuity, up from the previous price of $144 per person.

Previously: Restaurant Surcharges Are Set to Disappear This Summer Under New State Law

Photo: Simon Kadula