Landmark Law Raises Wages for Fast Food Workers

By Jose Cervantes

California’s minimum wage for fast-food workers has increased to $20 an hour beginning on April 1 as last year’s legislation, Assembly Bill 1228, officially took effect.

AB 1228 applies to fast food chains with at least 60 establishments nationwide, impacting more than 500,000 workers in the state.

Enacted in Sept. 2023, the minimum wage for these employees increased to $20 per hour, a 25% jump from the previous $16 hourly rate.

This increase represents a significant financial victory for fast-food workers, many of whom have long struggled with low wages and limited benefits.

“We did not just raise the minimum wage to $20 an hour for fast food workers,” said Assemblymember Chris R. Holden in a press release.

Assemblymember Holden, who introduced the bill, noted that increasing the minimum wage for fast workers is helping parents feed their children, students pay their expenses, and grandparents give their grandchildren birthday presents.

The legislation coincides with the establishment of the Fast Food Council, a regulatory nine-member voting body tasked with setting industry standards and future pay increases.

The council is empowered to set future minimum wage increases for fast food workers, with an annual cap of 3.5%, and develop standards for working conditions, including health and safety measures and training programs.

The voting body consists of two members each from the fast-food restaurant industry, franchisees and owners, employees, and employee advocates. One member of the public not associated with fast food in employment or advocacy acts as the council chairperson.

Two additional nonvoting members will be part of the council: one representative from the California Department of Industrial Relations and one representative from the Governor’s Office of Business and Economic Development.

The governor is to appoint representatives of the fast-food restaurant industry, franchisees or restaurant owners, fast-food employees, and members of the public.

The council’s authority extends until January 1, 2029, when the legislation expires, unless lawmakers extend it.

After the passage of AB 1228, the California State Assembly passed another bill, Assembly Bill 610, in March 2023 to clarify what constitutes “fast food restaurants.”

AB 610 exempts the original legislation, excluding fast food establishments in airports, hotels, event centers, theme parks, museums, or gambling establishments.

Restaurants that primarily serve employees of a single, for-profit corporation on its premises and are part of a larger campus or building complex are also exempt.

In an FAQ page on the California Department of Industrial Relations, fast-food establishments are defined as “selling food and beverages for immediate consumption,” regardless of the food or beverage sold.

As stated on the page, shops that sell ice cream, boba tea, pretzels, donuts, and coffee could be classified as fast-food establishments.

There are some scenarios where it becomes more unclear what may be classified as fast food under certain conditions.

The page lists an example of an employee working a shift in a fast-food restaurant inside a larger store that is not a grocery store while also working shifts inside the larger store itself.

The employee may only benefit from the wage increase for hours worked inside the fast-food establishment, given that the restaurant still meets the requirements of being a fast-food shop.

Implementing AB 1228 and AB 610 could impact the fast-food industry in California. Some chains have expressed concerns about rising labor costs and the need to raise menu prices to offset those expenses.

Chipotle’s CFO, Jack Hartung, predicted a “mid to high single-digit price increase” to cover the increased labor costs.

McDonald’s CEO Chris Kempczinski acknowledged the impact on competitors and hinted at potential changes to operations outside of price increases.

The California Department of Industrial Relations enforces the provisions of AB 1228 and AB 610. Fast food workers who believe they are being denied the $20 minimum wage can file a wage theft claim with the Labor Commissioner’s Office.

AB 1228 repealed and replaced the Fast Food Accountability and Standards Recovery Act or FAST Act, which was set to go into a referendum in Nov. 2024.

The bill removed joint employer provisions in the FAST Act and did not revive the IWC. At the same time, the FAST Act funded the IWC to reconvene and issue wage orders regulating wages, hours, and working conditions for various industries.

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