Minimum Wage in California’s Fast Food Industry for 2024

AB 1228 sets California’s fast food minimum wage at $20/hour starting April 2024, ensuring fair pay and workplace standards. A new Fast Food Council will oversee potential wage increases and industry guidelines.

By Douglas Wade, Attorney

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Table of Contents

1. What law increases the minimum pay for people who work in fast food?

2. In accordance with AB 1228, when will the minimum wage be raised?

3. Does the new legislation mandate that businesses that are subject to it post new minimum wages or orders from the Industrial Welfare Commissioner?

4. Are employers allowed to raise the number of lodging and meal credits that contribute to the minimum wage as per the orders of the Industrial Welfare Commission?

5. Is it legal for a local government to impose a higher minimum wage on workers exclusively employed by fast food chains?

6. What does the new law mean when it says employees of fast food restaurants?

7. What if the company I work for owns a franchise?

8. To what extent does the phrase “for immediate consumption” apply here?

9. My workplace is part of a nationwide chain of sixty or more restaurants that offers both quick-service meals and beverages as well as other products with a longer shelf life. How can I find out if the minimum wage for fast food applies to me?

10. Would the new regulation apply to a store that sells beverages and snacks like boba tea, ice cream, pretzels, cookies, and donuts?

11. Does the minimum wage law governing fast food apply to workers in online eateries and “ghost kitchens” as well?

12. Even though they meet the criteria for a “fast food restaurant,” are there any eateries that won’t be subject to the new rule?

13. My workplace is a fast food restaurant located within a store that isn’t a supermarket. My boss gives me work to do at both the fast food place and the other shop. Does the new minimum wage law at fast food outlets apply to me?

14. Although we work at different sites of the same fast food chain, my friend and I are coworkers. Thanks to the new law, my friend is no longer uninsured and is receiving $20 per hour. However, my boss claims that the law does not protect me. Might my boss be right?

15. The fast food restaurant where I work as a manager pays me a set wage and does not pay me extra for overtime. What does this law mean for me?

16. As an employer, I run a fast food joint inside a bigger store, and the managers in charge of the restaurant are also in charge of the rest of the establishment. Given that my supervisors oversee both the fast food service and other departments of the store, how much should I pay them?

17. Is it possible for an employer to deduct tip money from the minimum wage if their employees also receive tips?

18. My employer denies that the new law applies to me, even though I think it does. I have been working for my company for less than $20 per hour since April 1, 2024. How can I proceed?

19. A collector is trying to garnish my earnings, meaning they want to take money out of my paycheck before I get it. I work at a fast food business. My understanding is that there is a protection against garnishment of a portion of my hourly minimum wage. Does the minimum wage at fast food restaurants count as the minimum wage for garnishment purposes?

20. What exactly is the Fast Food Council?

21. What is the plan for the Fast Food Council?

What law increases the minimum pay for people who work in fast food?

California’s new Labor Code sections 1474 – 1476 are the result of AB 1228, a piece of legislation that accomplishes two primary goals. The first part of the bill raises the minimum wage for employees of fast food restaurants. The second part of the bill creates a Fast Food Council that can decide to raise the minimum salary again and can also decide to establish other minimum work guidelines for fast food restaurants.

In accordance with AB 1228, when will the minimum wage be raised?

With the new law going into effect on April 1, 2024, the minimum wage for all “fast restaurant employees” covered by it will be $20/hour.

Does the new legislation mandate that businesses that are subject to it post new minimum wages or orders from the Industrial Welfare Commissioner?

Yes. Businesses in the fast food industry that are required to pay minimum wage must also publish a supplement to that order. As a consequence of AB 1228, additional updates to Wage Orders 5 and 7 were made in March 2024.

Are employers allowed to raise the number of lodging and meal credits that contribute to the minimum wage as per the orders of the Industrial Welfare Commission?

No, AB 1228 did not give the go-ahead for minimum wage credits. The maximum amount that a fast food company can credit is the same as the state minimum wage.

Is it legal for a local government to impose a higher minimum wage on workers exclusively employed by fast food chains?

A local government cannot unilaterally raise the minimum wage for the fast food industry as a whole in order to comply with this statute.

A city or jurisdiction can, however, set a greater minimum wage for all workers, which would include workers who are under this rule. An example of a municipal minimum wage law would be to raise the minimum pay for all city employees above what fast food workers already earn. Then, the fast-food restaurant is required to pay the greater minimum wage set by the local government.

As long as fast food workers aren’t included, local governments have the authority to establish higher minimum wages for certain groups of workers.

What does the new law mean when it says employees of fast food restaurants?

Fast food restaurants are defined as those that fulfill every one of the following requirements:

In California, the food establishment in question must adhere to the definition of a “limited-service restaurant”. Customers in limited service restaurants place their orders and pay for their food and drinks before they eat or drink them. This means that there is little to no table service at these restaurants.

There are a minimum of sixty other locations like this one across the country. Any one place where people can go to buy food or drink is considered an establishment. The 60 establishment minimum does not apply to off-site business operations (i.e., locations that are physically distant from a restaurant) where workers do warehouse, administrative, or preliminary food production duties.

Food and drink for rapid consumption are the mainstays of the restaurant’s business model.

Nonetheless, the rule does not apply to all fast food joints.

What if the company I work for owns a franchise?

It makes no difference whether the employer is the parent company, a subsidiary, or a licensee of the national brand; AB 1228 applies to all fast food restaurant employers equally.

To what extent does the phrase “for immediate consumption” apply here?

Customers at fast food joints often eat their food at tables either within or outside the establishment, on the go in their cars, or upon returning home or to the office. Baking, cooking, or heating foods sold for home consumption does not constitute immediate consumption.

My workplace is part of a nationwide chain of sixty or more restaurants that offers both quick-service meals and beverages as well as other products with a longer shelf life. How can I find out if the minimum wage for fast food applies to me?

The fast food minimum wage applies if the restaurant chain makes over half of its profit from selling food and drink that customers can eat or drink right away.

For instance, the new law would apply to a fast food pizza chain if it made thirty percent of its money from prepped pizzas that customers could bake at home, but 70% from selling meals and drinks that are ready to eat right away. This would mean that the chain was mainly selling food and drinks for immediate consumption, unless there was some other exception.

Another case in point: the new law would not apply to a chocolate shop chain whose main business is not selling food or drink for immediate consumption, such as when 40% of sales come from individual servings of chocolate and 60% come from selling chocolate boxes.

Would the new regulation apply to a store that sells beverages and snacks like boba tea, ice cream, pretzels, cookies, and donuts?

The sort of food or drink sold at a business does not determine whether it is considered a “fast food restaurant” or not.

Does the minimum wage law governing fast food apply to workers in online eateries and “ghost kitchens” as well?

Most likely so. To the untrained eye, virtual concept restaurants and ghost kitchens look like “limited service restaurants” since their main business is taking pre-orders from customers who pay for their food and drinks before they eat—no table service, just delivery right to their door. Thus, the fast food minimum wage would apply to the ghost kitchen or virtual concept restaurant if it is one of sixty or more locations in the country that share uniform branding, marketing, and services, or if it preps food for sale under the name of such a chain.

Even though they meet the criteria for a “fast food restaurant,” are there any eateries that won’t be subject to the new rule?

Yes. According to the new law, the following restaurants will be exempt:

Exempt from the new regulation as of September 15, 2023, and continuing thereafter, are restaurants that run a bakery that makes and sells “bread” as an independent menu item. “Bread” is said to be one unit item that must be sold separately and has to weigh at least half a pound once cooled. Weights of individual products (e.g., one bread loaf that might or might not be cut after baking) are not subject to the one-half pound weight requirement, nor are weights of several things sold in a package that were not originally one unit when baked.

This exception does not apply to the following kinds of fast food joints:

Sandwich and burger joints that don’t offer bread on its own but do it as an ingredient
Businesses that offer foods that, once cooled, weigh less than half a pound, such as most croissants, muffins, scones, breadsticks, rolls, or buns (even when sold in bundles), but do not sell bread by the individual unit that weighs half a pound or more
Restaurants where customers can buy bread but where the bread is not “produced” on the grounds of the restaurant. To make bread, you need to mix water, flour, and yeast to form a dough, and then bake it. A bakery is not “making” bread if it bakes pre-made dough, meaning dough that was prepared or mixed elsewhere.

This exemption is exclusively for restaurants that have maintained the production and sale of bread as a separate menu item since September 15, 2023.

The restaurant’s main business activity need not be the sale of bread alone to qualify for this exemption. Bread sales may still qualify for the exemption even if they only account for a tiny fraction of the restaurant’s overall food sales.

A “grocery establishment” that also serves food is not required to comply with the new regulations.

In order to avoid being subject to the new law, a fast food joint must satisfy two conditions:

(1) The restaurant is inside a “grocery business,” which in this state means a store that is:

- -more than fifteen thousand square feet
- -sells poultry, meats, fish, deli items, canned goods, dairy products, dry goods, beverages, baked goods, prepared foods, and fresh produce for off-site consumption
- -sales of household goods or other things… supplementary to the core aim of food sales.

This typically indicates that the sale of food items intended for consumption outside of the restaurant accounts for more than half of the total revenue.

(2) Those who work at the restaurant are employees of the supermarket.

This legislation does not apply to restaurants that are associated with or run by the following establishments:

- -A terminal at an airport
- -A hotel
- -A venue with more than 1,000 seats or more than 20,000 square feet—such as a concert hall, racetrack, or sports stadium
- -An amusement park
- -An art gallery
- -A place where people can gamble, like a card room

Furthermore, the rule does not apply to restaurants that are bound by a food service contract or concession agreement;

When the restaurant’s main customers are workers of a single for-profit business located in the same building or on the same campus; or

In areas that are open to the public, such as beaches, parks, historic districts, or areas run by port authorities.

My workplace is a fast food restaurant located within a store that isn’t a supermarket. My boss gives me work to do at both the fast food place and the other shop. Does the new minimum wage law at fast food outlets apply to me?

Very probably. Fast food minimum wage law would cover your hours worked in the fast food restaurant, as your company does not come inside the “grocery establishment” exception. If no other exemption comes into play, then you would be subject to this rule.

Although we work at different sites of the same fast food chain, my friend and I are coworkers. Thanks to the new law, my friend is no longer uninsured and is receiving $20 per hour. However, my boss claims that the law does not protect me. Might my boss be right?

Yes. Employees in one of an employer’s businesses might be required to pay 20 dollars per hour, but those at another location might be exempt. Your place of employment may qualify for the bakery exemption if, for instance, they make and sell “bread” separately from other menu items. It is possible that your friend’s workplace does not “make” bread on the premises, even though they sell similar things and are part of the same restaurant chain. The new law would apply to your friend’s employer in this case, but not to the people who work at your site because of the baking exemption. The general minimum wage still applies to you.

The fast food restaurant where I work as a manager pays me a set wage and does not pay me extra for overtime. What does this law mean for me?

To be considered an “exempt employee” according to California wage and hour law, one must fulfill certain criteria and receive a wage that is at least double the state minimum wage for a 40-hour workweek. Starting April 1, 2024, you will not be considered an exempt employee if your salary as a fast food restaurant worker falls below $83,200.

As an employer, I run a fast food joint inside a bigger store, and the managers in charge of the restaurant are also in charge of the rest of the establishment. Given that my supervisors oversee both the fast food service and other departments of the store, how much should I pay them?

Under California law, a manager can be considered an “exempt employee” if their employer pays them twice the state minimum wage for a 40-hour workweek. There are other certain requirements that managers must meet, such as working on exempt tasks for more than half of their workday. To establish the salary cutoff for exemption, two separate statewide minimum wages would be applicable in this case: one for time spent supervising fast food restaurant work, and the statewide general minimum wage for time spent supervising workers not allocated to fast food restaurant work.

This is because your employee is managing both fast food restaurant workers and non-fast food restaurant workers. The mixed rate would need to be calculated weekly by the employer using the fraction of time spent on various duties.

To illustrate the point, in April 2024, a manager would need to earn $1,408 per week to qualify for exempt status if they spent forty percent of their time supervising employees at the store’s fast food restaurants and sixty percent of their time supervising the rest of the employees. Here is the math that represents this combination of rates:

$20/hour times two 40-hour workweeks equals $1,600 a week times 40%, or $640, for handling fast food businesses.

If you manage the store’s other operations for 40 hours a week at $16 an hour, you’ll make $1280 a week, or 60% of your income, or $768.

For that week, your blended rate will be $1,408. That’s $640 plus $768.

Is it possible for an employer to deduct tip money from the minimum wage if their employees also receive tips?

No. It is illegal for a business to deduct tips from an employee’s minimum wage payment.

My employer denies that the new law applies to me, even though I think it does. I have been working for my company for less than $20 per hour since April 1, 2024. How can I proceed?

Unpaid workers have the right to sue for their back pay, plus any damages or fines that may have accrued as a result of the violation. Your boss has the task of proving that the new law does not apply to them.

In most cases, you can file a claim with the Labor Commissioner, use an arbitration or other form of alternative dispute resolution (if your employment contract permits it), or go to court. Workers who choose the first path can submit a claim for wages to the Wage Claim Adjudication Unit of the Labor Commissioner. Alternatively, they can go to the Bureau of Field Enforcement to file a Report of Labor Law Violation. This division does not handle individual claims but can investigate and issue citations to employers. Visit the website or stop by any of the local offices of the Labor Commissioner to learn more about pay claims and employee rights generally.

A collector is trying to garnish my earnings, meaning they want to take money out of my paycheck before I get it. I work at a fast food business. My understanding is that there is a protection against garnishment of a portion of my hourly minimum wage. Does the minimum wage at fast food restaurants count as the minimum wage for garnishment purposes?

Yes. If there is no greater local minimum wage, the party attempting to garnish an employee’s pay must use the relevant statewide minimum wage for fast food restaurants. If no such wage exists, the employee’s wages will be free from garnishment.

What exactly is the Fast Food Council?

The Fast Food Council came into being as a result of AB 1228. Appointed members of the Fast Food Council are from the following backgrounds: owners or franchisees of fast food franchises, employees of fast food restaurants, represents fast food employees, and one public official who is not personally involved with the sector. The Governor’s Office of Business and Economic Development and the Department of Industrial Relations each have one non-voting member on the Council.

What is the plan for the Fast Food Council?

With frequent meetings, the Council will create new minimum employment requirements tailored to the fast food sector. Future increases to the minimum wage (which cannot take place before January 1, 2025) and regulations regarding working hours and conditions are all part of these standards, which aim to ensure and preserve the well-being, security, and health of, and provide the required costs of adequate living to workers of fast food restaurants.

Annual increases to the Council-mandated minimum wage can be no more than 3.5% or the rate of inflation, whichever is lower. The Fast Food Council has the option of setting a uniform minimum wage for all fast food restaurants in the state or setting different rates for different regions.

Attendance at Council meetings is mandatory, and members of the public will have the opportunity to voice their opinions on any matter pending action.

Have a quick question? We answered nearly 2000 FAQs.

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