As fast-food restaurants scramble to adapt to California’s new $20 per hour minimum wage for many workers starting later this year, a new bill could exempt certain establishments.
Assembly Bill 610, by Asm. Chris Holden would change labor codes enacted last year into law with his Assembly Bill 1228 by defining eight new exemptions that would not have to adopt the new wage requirements.
The bill would exempt fast food restaurants that operate in airports, hotels, museums, theme parks, event centers, and on state-owned property, such as beaches and parks.
Other exemptions include those for restaurants in office buildings and on campuses.
To qualify, those types of establishments must operate inside buildings owned by one for-profit company and serve primarily employees and affiliates within the organization instead of the public, according to the bill.
If ultimately passed, legal analysts say that courts will ultimately determine how the measures are interpreted, with lawsuits expected.
“California’s food industry is an ever-changing landscape and further exemptions are expected, as well as the always present litigation that will result,” representatives with law firm Ogletree Deakins wrote in a blog post Feb. 9.
The law requiring such wage hikes takes effect April 1, and establishes a council to oversee the industry, and that all limited-service restaurants with at least 60 chains nationwide—excepting those that bake bread on site and offer whole loaves for sale—to pay workers at least $20 per hour.
Such represents a nearly 30 percent increase from current minimum wage standards. Annual increases of about 3.5 percent are permitted, at the council’s discretion.
Approximately 500,000 fast food workers in California will qualify for the higher pay rate, according to industry estimates.
Some restaurants are responding to the incoming labor cost increase by reducing the number of staff employed—with Pizza Hut and Domino’s both announcing delivery driver layoffs after the bill was signed last year.
Other companies are looking to raise menu prices to maintain profitability, including Chipotle and McDonald’s.
The regulations set to take effect come after a controversial measure known as the Fast Act—signed into law in 2022—was challenged last year when industry lobbyists fought provisions that would have increased liability for franchisors.
Seen as a compromise between industry and labor, AB 1228 repealed the Fast Act and established a looser definition of fast-food restaurants.
The new proposal under AB 610 replaces a previous bill with the same name in this legislative session, through the California Legislature’s so-called “gut and amend” process, where the text and content of a bill can change while its numbering does not.
Mr. Holden did not respond to requests for comment on deadline.
