New Minimum Wage for California Fast-Food Workers

The California Department of Industrial Relations has released guidance regarding the newly implemented AB 1228..  Notably, AB 1228 institutes a new  minimum wage for California fast-food restaurant employees. Hourly employees will now be paid at least $20 per hour and the minimum annual salary for exempt managers is now $83,200.
AB 1228 also established a Fast-Food Council that is authorized to develop minimum employment standards for the fast-food industry, including potential future minimum wage increases each year.
This new law applies only to fast food restaurants that are “limited-service restaurants”.. A limited-service restaurant is defined as a restaurant that offers limited or no table service and where the customer must pay for food and beverages prior to consumption.  In California, in order to be considered ‘limited service’ they must also have at least 60 establishments nationwide and must currently be selling food and beverages for immediate consumption.
Exempt to the new law include:
  1. Restaurants that “operate a bakery that produces and sells bread as a stand-alone menu item”;
  2. Restaurants located inside “grocery establishment[s]”;
  3. Restaurants that operate in conjunction with an airport, hotel, event center, theme park, museum or gambling establishment;
  4. Restaurants subject to a concession agreement or other food service contract that serves a corporate campus.
  5. Restaurants located on a public beach, in a public park, in a historic district or operated by port authority. 
To ensure compliance with AB 1228, California fast food restaurants must take the following steps:
  • Assess whether any exemptions to AB 1228 apply to their restaurant.
  • If none of the exemptions apply restaurants must:
– work with their  payroll department or company to ensure that nonexempt employees are paid at least $20 per hour and that all applicable overtime rates are calculated accurately.
– ensure that exempt employees are paid at least $83,200 annually.
– update the notice to employees by posting the supplement to the minimum wage order, in the workplace. 
For case specific questions or more information regarding the implementation of AB 1228, contact the trusted Chugh, LLP corporate attorneys and accountants.

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