Starting today, April 1, 2024, the new minimum wage for fast food employees throughout the state of California is at least $20.00 an hour. For most other employers, the state minimum wage is currently $16.00 an hour.
AB 1228
On September 28, 2023, Governor Newsom signed into law AB 1228, the Fast Food Restaurant Industry legislation that raises the hourly minimum wage rate for certain fast food workers to $20 effective April 1, 2024. In addition, the legislation establishes a Fast Food Council within the Department of Industrial Relations (“DIR”), which is granted the authority to establish fast food restaurant minimum standards on wages and develop fast food restaurant minimum standards on working hours, and other working conditions adequate to ensure and maintain the health, safety, and welfare of, and to supply the necessary cost of proper living to, fast food restaurant workers and to ensure and effect interagency coordination and prompt agency responses regarding issues affecting the health, safety, and employment of fast food restaurant workers.
AB 1228 applies to national fast food chains, which are defined as “limited-service restaurants consisting of more than 60 establishments nationally that share a common brand, or that are characterized by standardized options for decor, marketing, packaging, products, and services, and which are primarily engaged in providing food and beverages for immediate consumption on or off premises where patrons generally order or select items and pay before consuming, with limited or no table service.” Bakeries and grocery stores are exempt from this definition and are not included as fast food restaurants. AB 1228 applies to employers of “fast food restaurant employees” regardless of whether the employer is the business entity that owns the national brand or a franchisee or licensee of that national brand.
The Department of Industrial Relations has provided a FAQ page to help employers navigate the change in the current law. The FAQs can be found here.
Changes to Fast Food Worker Wages
As discussed, the hourly minimum for fast food employees in national chains will be $20.00/hr starting today, April 1, 2024.
Under current California Labor Code section 515, exempt employees covered by the administrative, professional, or executive exemptions must be paid a salary of at least twice the state minimum wage for full-time employment to qualify for the exemption. A.B. 1228 provides that “the hourly minimum wage established [by A.B. 1228] shall constitute the state minimum wage for fast food restaurant employees for all purposes under [the Labor Code] and the wage orders of the Industrial Welfare Commission.” Therefore, the applicable minimum salary for fast food restaurant employees covered by A.B. 1228 to qualify for the California administrative, professional, or executive exemptions (e.g., salaried managers) will be $83,200 per year.
The hourly minimum wage for fast food employees may be increased by the Fast Food Council on an annual basis, beginning on January 1, 2025, by no more than the lesser of 3.5% or annual rate of change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (U.S. CPI-W). The Council has the authority to set different minimum wage rates in different regions of the State until the end of 2029.
AB 1228 does not authorize additional credits (i.e., additional meal and lodging credits) to the minimum wage. A fast food employer may only credit the amounts currently allowed by Industrial Wage Commission Wage Order 5-2001.
Employers covered by AB 1228 must post changes to the applicable minimum wage in the workplace.
Questions
If you have any questions regarding this Legal Alert, please get in touch with the following attorneys from our office or the attorney with whom you typically consult.
Alec Tyra
atyra@kmtg.com | 916.321.4293
Brianne O’Sullivan
bosullivan@kmtg.com | 916.321.4332
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