Fast Food Minimum Wage Frequently Asked Questions

Summary

Fast Food Minimum Wage Frequently Asked Questions

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Labor Commissioner's Office
Fast Food Minimum Wage Frequently Asked Questions
The FAQs provide general information and are not exhaustive.  They do not constitute legal advice regarding your particular circumstances
.
What is the new law that raises the minimum wage for fast food employees?
AB 1228 is a new law in California, which added sections 1474, 1475, and 1476 to the Labor Code and does two main things. First, it increases the minimum wage for “fast food restaurant employees.” Second, it establishes a Fast Food Council, which is empowered both to make future increases to the minimum wage and to adopt other minimum employment standards for fast food restaurants.
Minimum Wage Increase
When does the minimum wage increase in AB 1228 take effect?
Starting
April 1, 2024
,  all “fast food restaurant employees” who are covered  by the new law must be paid at least $20.00 per hour.
Does an employer covered by the new law have to post a new minimum wage or Industrial Welfare Commissioner Order?
Yes. A supplement to the minimum wage  order must be posted by employers covered by the fast food minimum  wage. The Supplement to the minimum wage order is available
here
.
Wage  Order 5
and
Wage  Order 7
were also  updated in March 2024 as a result of AB 1228.
Can an employer increase the amount of meal or lodging credits that count toward the minimum wage under the Industrial Welfare Commission Orders?
No.  AB 1228 did not authorize  additional credits to the minimum wage.  A fast food employer may only  credit the amounts allowed by the statewide minimum wage.
Can a city or county pass a fast food minimum wage law that sets a higher wage for only fast food restaurant employees?
No, a city or county cannot pass an ordinance setting  a higher minimum wage
only
for fast food restaurant employees  covered by this law.
However, a city or county can set a  higher general minimum wage for all employees that would apply to employees  covered by this law. For example, a local government minimum wage law could  require all employees in the city be paid more than the current fast food  employees’ minimum wage.  The fast food restaurant establishment then must  pay the higher local minimum wage.
A local government can also set a  higher minimum wage that is specific to a particular group of employees so long  as it does not include fast food employees. Visit
Minimum Wage Frequently  Asked Questions (ca.gov)
Who is Covered by the Current Law
Who  are “fast food restaurant employees” under the new law?
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.
However, some fast food restaurants  are exempt from the law. (See Question 12).
What if my employer is a franchise owner?
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.
What does the term “for immediate consumption” mean?
Typically, customers at a fast food  restaurant will eat at a table inside or outside the restaurant, in their car,  or as soon as they get back home or to work with their order.  Food sold  to be baked, cooked, or heated at home is not for immediate consumption.
I work for one of a chain of 60 or more restaurants nationally that both sells food and drinks for immediate consumption but also sells other items not meant for immediate consumption. How do I know whether I am covered by the fast food minimum wage?
You will be covered by the fast food minimum wage if the chain of restaurants is
primarily  engaged in
, meaning it earns more than 50% of its gross revenue from,  selling food or beverage items that are for immediate consumption.
For example, if a fast food pizza  chain of restaurants earns 30% of its revenue from “take and bake” pizza to be baked at  home, but earns 70% of its revenue from sales of fully-cooked food and  beverages for immediate consumption, the chain is primarily engaged in  selling food and beverage for immediate consumption and would be covered by the  new law (provided no other exemption applies).
As another example, if a chain of chocolate sellers earns 40% of its revenue from selling chocolates for people to eat immediately but 60% of its revenue from selling boxes of chocolates, the chain is not primarily engaged in selling food and beverage for immediate consumption and would not be covered by the new law.
Could a shop that features ice cream, coffee, boba tea, pretzels, cookies, or donuts be considered a fast food restaurant covered by the new law?
Yes, the definition of “fast food  restaurant” (see Question 6) does not depend on what type of food or beverage  an establishment sells.
Does the fast food minimum wage apply to employees at virtual restaurants or ghost kitchens?
Possibly. Generally, ghost kitchens and virtual concept restaurants appear to be “limited service restaurants” because they are primarily engaged in providing food services to patrons who order or select items and pay before eating, without any table service, with food and drink orders delivered to the customer’s location. Therefore, if the ghost kitchen or virtual concept restaurant is part of a nationwide chain consisting of at least 60 establishments characterized by standardized marketing, products or services, or if it prepares food that is sold under the brand label of such a nationwide chain, the ghost restaurant or virtual concept restaurant would be covered by the fast food minimum wage.
Are there any restaurant establishments that would fit within the above definition of "fast food restaurant," but are nonetheless exempt from the new law?
Yes. The following restaurant establishments are not covered by the new law:
Restaurants that operate a bakery that "produces" and sells "bread" as a stand-alone menu item as of September 15, 2023, and continue to do so are exempt from the new law.
“Bread” is defined as a  single unit item that weighs at least ½ pound after cooling and must be sold as a  stand-alone item. The one-half pound weight requirement applies to the weight of the single item (e.g., a single loaf of bread that may or may not be sliced after baking), not the weight of multiple items packaged together for sale that were not one unit when baked.
The following types of fast  food restaurants do not come under the exemption:
Restaurants         that sell bread only as part of a sandwich or hamburger, but not as a         stand-alone menu item;
Restaurants         that sell stand-alone items weighing less than one-half pound after         cooling, such as most muffins, croissants, scones, rolls, breadsticks, or buns, even if sold as a bundle, but         do not sell a single unit of bread weighing at least one-half pound after cooling; and
Restaurants         that do not “produce” bread on the premises of the restaurant location         where customers purchase the bread. Producing bread includes making the         dough (typically, flour, water, and yeast) and baking it. Baking         pre-made dough, i.e., dough that was mixed or prepared at another         location, does not constitute “producing” bread at the establishment         where the bread is sold.
This exemption applies only to restaurant establishments that produced and sold bread as stand-alone menu items as of September 15, 2023, and have continued to do so.
This exemption does
not
require that the restaurant be primarily engaged in the sale of bread as a stand-alone item.  The exemption may apply even when the sale of bread as a stand-alone menu item constitutes a small portion of the restaurant’s total food sales.
Restaurants located within a “grocery establishment” are  exempt from the new law.
A fast food restaurant establishment is exempt from the new  law if it meets both of the following:
(1)	The restaurant establishment is located and operates within a “grocery establishment.” The term “grocery establishment” is defined as a retail store in the state that is:
over       15,000 square feet in size; and
sells       primarily household foodstuffs for offsite consumption, including the sale       of fresh produce, meats, poultry, fish, deli products, dairy products,       canned foods, dry foods, beverages, baked foods, or prepared foods”;
with any       sale of other “household supplies or other products … secondary to the       primary purpose of food sales.”
Primarily means that the establishment earns more than 50% of its gross income from the sale of household foodstuffs for offsite consumption.
(2)	The  grocery establishment employer employs the individuals working in the  restaurant.
Restaurants connected to or operating in conjunction with the following locations are also not covered by the law:
An airport;
A hotel;
An event center that is over 20,000 square feet         or has more than 1,000 seats (for example, a sports stadium concert         hall, or racetrack);
A theme park;
A museum; or
A gambling  establishment (for example, a card room)
Also not covered by the law are restaurants subject to a concession agreement or food service contract if the restaurant is
In a building or  campus primarily used by one for-profit company
if
the restaurant  primarily serves the employees of that company; or
On public land
if
the public land is a public beach, park, historic district, or operated by a  port authority
I  work for a fast food restaurant that is inside another store that is not a  grocery store. My employer assigns me to tasks both in the fast food restaurant  and in the other store. Am I covered by the new minimum wage law for fast food  restaurants?
Most likely. Your employer does not fall  within the “grocery establishment” exemption, so if no other exemption applies,  you would be covered by the fast food minimum wage law for the hours you work
in the fast food restaurant
.
My friend and I work for the same fast food restaurant  chain, at different locations. My friend is covered by the new law and is now  being paid $20.00 an hour. But my supervisor says I am not covered by the law.  Could my supervisor be correct?
Yes.  Even though an employer may have to pay $20.00 an hour to workers at some of  its establishments, workers at the employer’s other establishments may be  exempt from the law. For example, if the establishment where you work produces  and sells “bread” as a stand-alone menu item, your work establishment would be  exempt under the bakery exemption. The establishment where your friend works  may be selling the same items and be a part of the same restaurant chain, but may  not “produce” bread on site. Under this scenario, your friend’s establishment  would be covered by the new law, and the employees at your establishment would  be exempt under the bakery exemption. You are still entitled to the generally applicable  minimum wage.
Minimum Wage Frequently Asked  Questions (ca.gov)
I am a manager at a fast food restaurant paid a salary  and do not receive overtime. Does this law impact me?
Under California law, to qualify as an  “exempt employee” for wage and hour purposes, you must receive a salary  of at least two times the state minimum wage for someone working 40 hours  a week
and
meet other specific requirements.  If your  salary is less than $83,200 as a fast food restaurant employee starting on  April 1, 2024, you are not an exempt employee.
I am an employer that operates a fast food restaurant inside of a larger store, and my managers oversee both the fast food restaurant and the rest of the store. What salary should I be paying my managers given they spend time managing both employees who work in the fast food restaurant and employees who work in other parts of the store?
For  a manager to qualify as an “exempt employee” under California law, the employer  must pay them at least two times the state minimum wage for someone working 40  hours a week, and the manager must meet other specific requirements, including  the requirement that the manager must be engaged in exempt tasks for more than  50% of their worktime. If your employee is managing both fast-food restaurant workers  and non-fast food restaurant workers, then two different statewide minimum  wages would apply to determine the salary threshold for exemption-the fast food  restaurant minimum wage for time overseeing the fast food restaurant work and  the general statewide minimum wage for the time overseeing workers not assigned  to, fast food restaurant work. An employer would have to calculate the blended  rate on a weekly basis, based on the percentage of time spent on those tasks.
For example, a manager who, in the  course of a workweek in April 2024, spends forty percent (40%) of their time  overseeing the store’s fast food restaurant workers and sixty percent (60%) of  their time managing the store’s other workers would have to be paid $1,408 to  meet the minimum salary requirement for exempt status that week.  The math capturing this blending of rates  follows:
For time spent managing fast-food  operations:  $20/hour x 2 x 40 hour  fulltime workweek = $1,600 weekly salary x 40% = $640
For time spent managing store’s other  operations: $16/hour x 2 x 40 hour fulltime workweek = $1280 weekly salary x  60% = $768
Blended rate:  $640 plus $768 = $1,408 salary for that week.
If a  worker also gets paid tips, can an employer use the tips as a credit toward the  obligation to pay the minimum wage?
No. An  employer may not use an employee's tips as a credit toward its obligation to  pay the minimum wage per hour.
I believe I am covered by the new law, but my employer  says I am not. Since April 1, 2024, my employer has been paying me less than  $20 an hour for the work I’ve performed. What should I do?
An  employee who has not been paid the minimum wage can bring a legal claim to  recover wages due and possibly related damages and penalties. Your employer  will carry the burden of showing they are not covered by the new law.
Generally  speaking, there are three ways to present such a claim - through the Labor  Commissioner, through an alternative dispute resolution system such as  arbitration (if required or allowed under an employment agreement), or through  a lawsuit in court. Employees pursuing the first option can
file an individual  wage claim
with the Labor Commissioner's Wage Claim Adjudication Unit, or they can file
a Report of Labor Law  Violation
with the Labor Commissioner's Bureau of Field Enforcement, which does not  pursue individual claims, but may investigate and cite the employer. More  information about wage claims and employee rights in general is available on
the Labor  Commissioner’s website
or from any of
the Labor Commissioner's local offices
.
I am a fast food restaurant employee, and a collector is attempting to garnish my wages-that is, get the money from my paycheck before I receive it. I understand that part of the hourly minimum wage that I make is protected from collection. Is the minimum wage for purposes of garnishment the fast food restaurant minimum wage?
Yes.  When calculating the wages exempt from garnishment for a fast food restaurant  employee, the party seeking to garnish the wages must use the applicable  statewide fast food restaurant minimum hourly wage unless a higher, local  minimum hourly wage exists.
Role of the Fast Food Council in Addition to the Minimum Wage
What is the Fast Food Council?
AB 1228 created the Fast Food  Council.  The Fast Food Council is composed of appointed representatives  from the fast food restaurant industry, fast food restaurant franchisees or  restaurant owners, fast food restaurant employees, advocates for fast food  restaurant employees, and one unaffiliated member of the public. The  Council also has two non-voting members, one from the Department of Industrial  Relations and one from the Governor’s Office of Business and Economic  Development.
What  will the Fast Food Council do?
The Council will meet  regularly to develop new minimum employment standards specific to the fast food  industry.  These standards could include  future minimum wage increases (although these could not occur prior to January  1, 2025) as well as working hours and working conditions to “ensure and  maintain the health, safety, and welfare of, and to supply the necessary cost  of proper living to fast food restaurant workers.”
The hourly minimum wage  established by the Council can increase every year by either 3.5% or the  increase in the consumer price index, whichever is smaller. The Fast Food  Council can establish a single statewide minimum wage for fast food restaurant  employees or vary the minimum wage by region of the State.
The Council’s meetings will  be open to the public, and the Council will take public comment on all action  items.
September 2024

Retrieval chunks

• #1

  Labor Commissioner's Office Fast Food Minimum Wage Frequently Asked Questions The FAQs provide general information and are not exhaustive. They do not constitute legal advice regarding your particular circumstances . What is the new law that raises the minimum wage for fast food employees? AB 1228 is a new law i…

• #2

  Who are “fast food restaurant employees” under the new law? 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 …

• #3

  For example, if a fast food pizza chain of restaurants earns 30% of its revenue from “take and bake” pizza to be baked at home, but earns 70% of its revenue from sales of fully-cooked food and beverages for immediate consumption, the chain is primarily engaged in selling food and beverage for immediate consumption…

• #4

  “Bread” is defined as a single unit item that weighs at least ½ pound after cooling and must be sold as a stand-alone item. The one-half pound weight requirement applies to the weight of the single item (e.g., a single loaf of bread that may or may not be sliced after baking), not the weight of multiple items packag…

• #5

  with any sale of other “household supplies or other products … secondary to the primary purpose of food sales.” Primarily means that the establishment earns more than 50% of its gross income from the sale of household foodstuffs for offsite consumption. (2) The grocery establishment employer employs the…

• #6

  Yes. Even though an employer may have to pay $20.00 an hour to workers at some of its establishments, workers at the employer’s other establishments may be exempt from the law. For example, if the establishment where you work produces and sells “bread” as a stand-alone menu item, your work establishment would be …

• #7

  For a manager to qualify as an “exempt employee” under California law, the employer must pay them at least two times the state minimum wage for someone working 40 hours a week, and the manager must meet other specific requirements, including the requirement that the manager must be engaged in exempt tasks for more…

• #8

  Generally speaking, there are three ways to present such a claim - through the Labor Commissioner, through an alternative dispute resolution system such as arbitration (if required or allowed under an employment agreement), or through a lawsuit in court. Employees pursuing the first option can file an individual …

• #9

  The hourly minimum wage established by the Council can increase every year by either 3.5% or the increase in the consumer price index, whichever is smaller. The Fast Food Council can establish a single statewide minimum wage for fast food restaurant employees or vary the minimum wage by region of the State. The C…