AB 1228, a new California law, impacts the minimum wage for Fastfood Foods employees. It establishes a $20.00 per hour minimum wage for eligible employees starting April 1, 2024, and creates a Fast Food Council to potentially implement future wage increases and set industry-specific employment standards.
The law defines “fast food restaurant” as a limited-service restaurant in a chain with at least 60 locations nationwide, primarily selling fastfood foods for immediate consumption. Franchisees and licensees are included. “Immediate consumption” generally refers to food eaten on-site, in a car, or immediately upon arriving home or at work, excluding items requiring further preparation.
Several exemptions exist. Restaurants primarily selling bread as a stand-alone item weighing at least half a pound, those located within grocery stores over 15,000 square feet that primarily sell household foodstuffs, and those in specific locations like airports, hotels, or large event centers are exempt.
A fast food restaurant within a larger non-grocery store is still covered by the law. Employees working in both the restaurant and the larger store are likely covered for the hours worked within the restaurant. Variations in coverage can exist within the same chain due to exemptions.
Even if an employer operates multiple establishments, some locations may be exempt due to specific criteria, while others remain covered. For instance, a location selling bread as a stand-alone item might be exempt, while another location in the same chain without bread sales would be covered.
Salary-based managers in fastfood foods establishments must earn at least twice the state minimum wage for a 40-hour workweek to be considered exempt employees. As of April 1, 2024, this threshold is $83,200 per year. Managers overseeing both fast food and non-fast food employees require a blended salary calculation based on the time spent managing each group.
Tips cannot be credited toward the minimum wage obligation. Employees believing they are covered but receiving less than $20.00 per hour can file a wage claim with the Labor Commissioner. The minimum wage for garnishment purposes is the fastfood foods minimum wage or a higher local minimum wage.
The Fast Food Council, comprising industry representatives, employees, advocates, and public members, will develop industry-specific employment standards, potentially including future minimum wage increases, working hours regulations, and improved working conditions. The Council’s meetings are open to the public, allowing for comment on proposed actions. Annual minimum wage increases are capped at 3.5% or the consumer price index increase, whichever is lower.
Wage Order 5 and Wage Order 7 were updated in March 2024 reflecting AB 1228 and a supplement to the minimum wage order must be posted by covered employers. Cities and counties cannot enact higher minimum wages specifically for fastfood foods employees covered by this law, but can establish higher general minimum wages applying to all employees.
