The California Department of Industrial Relations has released guidance on a new law that entitles certain fast food restaurant workers to a minimum wage of $20 per hour beginning April 1, 2024. The state has also enacted legislation that expands the exemptions from the law effective immediately.
The details
Background
Effective April 1, 2024, fast food restaurant workers in California working at a “national fast-food chain” establishment must be paid a minimum of $20 per hour. The fast-food worker minimum wage will be adjusted for inflation beginning on Jan. 1, 2025.
The law defines “national fast-food chain” as follows:
A set of 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. For purposes of the definitions in this part, “limited-service restaurant” includes, but is not limited to, an establishment with the North American Industry Classification System Code 722513.
As enacted, the law exempted the following entities from the requirement:
- Establishments operating a bakery that produces bread for sale as a stand-alone item on the establishment’s premises; and
- Restaurants located in a grocery establishment where the grocery employs the restaurant workers.
Newly Released Guidance
The California Department of Industrial Relations has released guidance in the form of frequently asked questions on the new law.
The guidance addresses who is covered by the law. Specifically, the guidance states the law applies only to employees of “fast food restaurants.” To be considered a fast-food restaurant, the restaurant must meet all of the below criteria:
- The restaurant must be a “limited-service restaurant” in California. A limited-service restaurant is one that offers limited or no table service, where the customers order food or beverage items and pay for those items before the items are consumed.
- The restaurant is part of a restaurant chain of at least 60 establishments nationwide. An establishment is a single restaurant location offering food or beverages to customers. Off-site business locations (geographically separate from a restaurant location), at which employees perform administrative, warehouse, or preparatory food production tasks, are not counted as “establishments” toward the 60-establishment minimum.
- The restaurant is primarily engaged in selling food and beverages for immediate consumption.
The guidance also says covered employers must post a supplemental minimum wage poster and updated wage orders #5 and #7 (as applicable).
The frequently asked questions can be accessed here.
Assembly Bill 610
The state also recently enacted legislation that expands the exemptions to the law. Effective immediately, a restaurant is also exempt from paying the fast-food worker minimum wage if it is:
· Located in an airport.
· Connected to or operated in conjunction with a hotel.
· Connected to or operated in conjunction with an event center of more than 20,000 square feet or 1,000 seats.
· Connected to or operated in conjunction with a theme park.
· Connected to or operated in conjunction with a public or private museum.
· Connected to or operated in conjunction with a gambling establishment.
· All of the following:
o Located in and operated in conjunction with a building, group of buildings, or campus used for office purposes primarily or exclusively by a single, for-profit corporation and its affiliates.
o Primarily or exclusively serves employees of that corporation or its affiliates rather than the general public.
o Is part of, or subject to, a concession or food service contract covering the building, group of buildings, or campus.
· Located on land owned by the state, a city or county, or other political subdivision of the state, that is part of a port district or land managed by a port authority or port commission, a public beach, public pier, state park, municipal or regional park, or historic district, and is operated pursuant to a concession agreement or food service contract.
Next steps
If you are a covered employer:
· Read the frequently asked questions in full.
· Pay the minimum wage of at least $20 per hour for fast food workers, unless an exemption applies.
· Post updated notices, unless an exemption applies.