California Raises Wages for Fast-Food Workers

​A new California law means fast-food workers will be paid more and a new state entity will oversee working conditions in the industry.

On Sept. 28, Gov. Gavin Newsom signed AB 1228, which sets a $20 minimum wage for fast-food workers starting on April 1, 2024. The fast-food employee minimum wage will increase annually until 2029, based on the Consumer Price Index. The law applies to chains of limited-service restaurants consisting of more than 60 establishments that share common branding, marketing and products.

As a result, "menu prices are going to have to increase, so it's going to hit the consumer almost immediately," said Alden Parker, an attorney with Fisher Phillips in Sacramento, Calif. Additionally, "the penalty for [an employee's] missed meal period goes up too, because that's tied to the minimum wage."

Some family-run restaurants could experience a labor shortage if bussers, prep cooks and hosts seek higher wages at fast-food chains, Parker noted.

The bill was recently amended to eliminate a provision that would have imposed joint-employer status on franchisers. That step "preserves the franchise business model in the state and solidifies the best possible outcome for workers, local restaurant owners and brands," said Matt Haller, president of the International Franchise Association in Washington, D.C. "Common sense has prevailed."

Fast Food Council

The new law establishes the Fast Food Council, which can set an hourly minimum wage for fast-food restaurant employees and institute health, safety and employment standards for fast-food restaurants. 

This law repeals the state's Food Accountability and Standards Recovery Act, which would have increased the fast-food minimum wage to $22 per hour with annual increases thereafter. That law also would have "granted the Fast Food Council more expansive powers to regulate fast-food industry working conditions," said Christopher Olmsted, an attorney with Ogletree Deakins in San Diego.

Under the new law, the Fast Food Council will have nine voting members:

• Two representatives of the fast-food restaurant industry.
• Two representatives of fast-food restaurant franchisees or restaurant owners.
• Two representatives of fast-food restaurant employees.
• Two representatives of advocates for fast-food restaurant employees.
• One unaffiliated member of the public who is not an owner, franchisee, officer or employee in the fast-food industry; who is not an employee or officer of a labor organization or a member of a labor organization representing fast-food restaurant employees; and who has not received income from the fast-food industry or any labor organization for a period of two years prior to appointment.
  

The council also will have two nonvoting members: one representative from the state Department of Industrial Relations and one representative from the Governor's Office of Business and Economic Development.

The council's purpose is to establish minimum standards on wages, working hours, training and other working conditions to maintain the health, safety and welfare of fast-food workers. The council will provide direction to and coordinate with state agencies. The council must convene its first meeting by March 15, 2024.

Under the law, "cities cannot have their own fast-food council, and cities and counties cannot have their own fast-food minimum wage," Parker said, but the state Fast Food Council can establish regional minimum wages that are higher than $20. "That's a real concern that we're going to be watching pretty closely."

The Fast Food Council cannot institute predictive scheduling, which would require employers to notify workers about their work schedule two weeks beforehand, Parker said.

The new law prohibits fast-food restaurant operators from firing, discriminating against or retaliating against any employee due to the employee's participation in or testimony to a proceeding convened by the Fast Food Council.