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Fast Food Minimum Wage: One-Month Countdown

Posted by Giuliana Gabriel, J.D., HR Compliance Director on March 1, 2024

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As a reminder, fast food chains must prepare for the new minimum wage of $20/hour, effective April 1, 2024. That is just one month away!

The new law (AB 1228) applies to all limited-service restaurants that are part of chains with over 60 locations nationally. Limited-service restaurants are those 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. A limited-service restaurant includes, but is not limited to, an establishment with the North American Industry Classification System Code 722513. There are exceptions for qualifying bakeries and grocery stores.

Read more about AB 1228 in our previous blog article.

If This Change Applies to You

Make sure you take the following steps to ensure compliance:

  • Update your payroll system
  • Notify your affected employees. Employers may do this by updating the Wage Theft Form, and retaining a copy for the employee’s personnel file
  • Ensure your wage statements reflect the correct pay rates, including overtime rates
  • If the change impacts your pay scales, including for job postings, be sure to update those as well
  • Consider any personnel restructuring and/or shift adjustments as needed

Unanswered Questions

Unfortunately, the bill leaves some important, unanswered questions. If you are unsure of coverage, we recommend erring on the side of caution, or consulting legal counsel. For example, AB 1228 is silent on:

  • What is meant by the term primarily engaged?
  • For restaurants that operate within a different business (e.g., a Starbucks inside a Target, or a Subway inside a gas station), how does the fast food minimum wage apply to workers at those businesses?
  • For covered employers, is the exempt salary threshold two times the fast food minimum wage ($83,200/year), or two times the regular State minimum wage ($66,560/year)?

Exemptions Ahead?

In a new proposed bill, AB 610, there would be carve outs for certain businesses, particularly those that operate within other larger spaces, including restaurants in airports, hotels, event centers, theme parks, museums, gambling establishments, and other locations. This bill has an urgency clause, meaning it would take effect immediately if enacted. Stay tuned.