As of April 1, 2024, fast-food workers in California will be making a minimum of $20 per hour, making them the highest-paid in their industry across the United States. This comes on top of an overall minimum wage increase in California to $16 per hour in 2024.
The law prescribes a detailed definition of what qualifies as a fast-food restaurant:
- Offering limited or no table service where customers order and pay their food or beverages before being served.
- The restaurant forms part of a minimum of 60 establishment chains nationwide.
- The primary engagement being the selling of food and beverages for immediate consumption.
The law also includes exemptions for restaurants situated inside large department or grocery stores such as Walmart and Target. Restaurants located in theme parks, airports, hotels, museums, and casinos do not fall under this law as they traditionally charge more than their mainstream counterparts.
Concerns from legal specialists at Greenberg Traurig suggest the language of this new law might drive some unintended consequences. Suggestions in a press release indicate that the definition of fast-food is vague and could affect businesses not typically considered “fast food”. The law could also discourage fledgeling fast-food chains in California from developing more than 59 restaurants.
Unsurprisingly, fast-food workers receiving minimum wage are set to benefit from this law with a significant boost to their paychecks. However, some workers already receive more than the minimum wage, as the minimum wage of most significant cities averages between $17 and $18 per hour.
The state and federal governments can also expect increased revenue. Additional payroll taxes will be collected due to the higher wages, and unemployment taxes will be collected at a faster pace, though they are capped at the first $7,000 of an employees’ wages annually.
How the new wage law will affect businesses and customers remains to be seen. There are concerns that businesses will find ways to circumvent the law or reduce their staff numbers. If the cost increases are passed onto the consumers, they may start considering other options.