1. Labor Commissioner's Office

Fast Food Minimum Wage Frequently Asked Questions

The FAQs provide general information and are not exhaustive. They do not constitute legal advice regarding your particular circumstances.

1. What is the new law that raises the minimum wage for fast food employees?

AB 1228 is a new law in California, which added sections 1474, 1475, and 1476 to the Labor Code and does two main things. First, it increases the minimum wage for “fast food restaurant employees.” Second, it establishes a Fast Food Council, which is empowered both to make future increases to the minimum wage and to adopt other minimum employment standards for fast food restaurants.

Minimum Wage Increase

2. When does the minimum wage increase in AB 1228 take effect?

Starting April 1, 2024, all “fast food restaurant employees” who are covered by the new law must be paid at least $20.00 per hour.

3. Does an employer covered by the new law have to post a new minimum wage or Industrial Welfare Commissioner Order?

Yes. A supplement to the minimum wage order must be posted by employers covered by the fast food minimum wage. The Supplement to the minimum wage order is available here. Wage Order 5 and Wage Order 7 were also updated in March 2024 as a result of AB 1228.

4. Can an employer increase the amount of meal or lodging credits that count toward the minimum wage under the Industrial Welfare Commission Orders?

No.  AB 1228 did not authorize additional credits to the minimum wage.  A fast food employer may only credit the amounts allowed by the statewide minimum wage.

5. Can a city or county pass a fast food minimum wage law that sets a higher wage for only fast food restaurant employees?

No, a city or county cannot pass an ordinance setting a higher minimum wage only for fast food restaurant employees covered by this law.

However, a city or county can set a higher general minimum wage for all employees that would apply to employees covered by this law. For example, a local government minimum wage law could require all employees in the city be paid more than the current fast food employees’ minimum wage.  The fast food restaurant establishment then must pay the higher local minimum wage.

A local government can also set a higher minimum wage that is specific to a particular group of employees so long as it does not include fast food employees. Visit Minimum Wage Frequently Asked Questions (ca.gov)

Who is Covered by the Current Law

6. Who are “fast food restaurant employees” under the new law?

The law applies only to employees of “fast food restaurants.” To be considered a fast food restaurant, the restaurant must meet ALL of the below criteria:

• The restaurant must be a “limited-service restaurant” in California. A limited service restaurant is one that offers limited or no table service, where the customers order food or beverage items and pay for those items before the items are consumed.
• The restaurant is part of a restaurant chain of at least 60 establishments nationwide. An establishment is a single restaurant location offering food or beverages to customers. Off-site business locations (geographically separate from a restaurant location), at which employees perform administrative, warehouse, or preparatory food production tasks, are not counted as “establishments” toward the 60 establishment minimum.
• The restaurant is primarily engaged in selling food and beverages for immediate consumption.

However, some fast food restaurants are exempt from the law. (See Question 11).

7. What if my employer is a franchise owner?

AB 1228 applies to employers of “fast food restaurant employees” regardless of whether the employer is the business entity that owns the national brand, or a franchisee or licensee of that national brand.

8. What does the term “for immediate consumption” mean?

Typically, customers at a fast food restaurant will eat at a table inside or outside the restaurant, in their car, or as soon as they get back home or to work with their order.  Food sold to be baked, cooked, or heated at home is not for immediate consumption.

9. If the restaurant meets the “fast food restaurant” criteria, but also offers prepared dishes that are intended to be baked, cooked, or heated elsewhere, would the restaurant still be covered by the new law?

Possibly. The restaurant establishment may be covered by the new law if the restaurant establishment is primarily engaged in, meaning it earns more than 50% of its gross income from, selling food or beverage items that are for immediate consumption.

For example, if a fast food pizza restaurant earns 30% of its revenue from “take and bake” pizza to be baked at home, but earns 70% of its revenue from sales of fully-cooked food and beverages for immediate consumption, the restaurant is primarily engaged in selling food and beverage for immediate consumption and would be covered by the new law (provided no other exemption applies).

10. Could a shop that features ice cream, coffee, boba tea, pretzels, or donuts be considered a fast food restaurant covered by the new law?

Yes, the definition of “fast food restaurant” (see Question 6) does not depend on what type of food or beverage an establishment sells.

11. Are there any restaurant establishments that would fit within the above definition of "fast food restaurant," but are nonetheless exempt from the new law?

Yes. The following restaurant establishments are not covered by the new law:

1. Restaurants that operate a bakery that "produces" and sells "bread" as a stand-alone menu item as of September 15, 2023, and continue to do so are exempt from the new law.

“Bread” is defined as a single unit item that weighs at least ½ pound after cooling and must be sold as a stand-alone item.

The following types of fast food restaurants do not come under the exemption:

• Restaurants that sell bread only as part of a sandwich or hamburger, but not as a stand-alone menu item;
• Restaurants that sell stand-alone items weighing less than one-half pound after cooling, such as most muffins, croissants, scones, rolls, or buns, but do not sell bread weighing at least one-half pound after cooling; and
• Restaurants that do not “produce” bread on the premises of the restaurant location where customers purchase the bread. Producing bread includes making the dough (typically, flour, water, and yeast) and baking it. Baking pre-made dough, i.e., dough that was mixed or prepared at another location, does not constitute “producing” bread at the establishment where the bread is sold.  

This exemption applies only to restaurant establishments that produced and sold bread as stand-alone menu items as of September 15, 2023, and have continued to do so.

This exemption does not require that the restaurant be primarily engaged in the sale of bread as a stand-alone item. The exemption may apply even when the sale of bread as a stand-alone menu item constitutes a small portion of the restaurant’s total food sales.

2. Restaurants located within a “grocery establishment” are exempt from the new law.

A fast food restaurant establishment is exempt from the new law if it meets both of the following:

(1) The restaurant establishment is located and operates within a “grocery establishment.” The term “grocery establishment” is defined as a retail store in the state that is:

• over 15,000 square feet in size; and
• sells primarily household foodstuffs for offsite consumption, including the sale of fresh produce, meats, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, baked foods, or prepared foods”;
• with any sale of other “household supplies or other products … secondary to the primary purpose of food sales.” 

Primarily means that the establishment earns more than 50% of its gross income from the sale of household foodstuffs for offsite consumption.

(2) The grocery establishment employer employs the individuals working in the restaurant.

3. Restaurants connected to or operating in conjunction with the following locations are also not covered by the law:
• An airport;
• A hotel;
• An event center that is over 20,000 square feet or has more than 1,000 seats (for example, a sports stadium concert hall, or racetrack);
• A theme park;
• A museum; or
• A gambling establishment (for example, a card room)
4. Also not covered by the law are restaurants subject to a concession agreement or food service contract if the restaurant is
• In a building or campus primarily used by one for-profit company if the restaurant primarily serves the employees of that company; or
• On public land if the public land is a public beach, park, historic district, or operated by a port authority
12. I work for a fast food restaurant that is inside another store that is not a grocery store. My employer assigns me to tasks both in the fast food restaurant and in the other store. Am I covered by the new minimum wage law for fast food restaurants?

Most likely. Your employer does not fall within the “grocery establishment” exemption, so if no other exemption applies, you would be covered by the fast food minimum wage law for the work hours you perform the hours you work in the fast food restaurant.

13. My friend and I work for the same fast food restaurant chain, at different locations. My friend is covered by the new law and is now being paid $20.00 an hour. But my supervisor says I am not covered by the law. Could my supervisor be correct?

Yes. Even though an employer may have to pay $20.00 an hour to workers at some of its establishments, workers at the employer’s other establishments may be exempt from the law. For example, if the establishment where you work produces and sells “bread” as a stand-alone menu item, your work establishment would be exempt under the bakery exemption. The establishment where your friend works may be selling the same items and be a part of the same restaurant chain, but may not “produce” bread on site. Under this scenario, your friend’s establishment would be covered by the new law, and the employees at your establishment would be exempt under the bakery exemption. You are still entitled to the generally applicable minimum wage.  Minimum Wage Frequently Asked Questions (ca.gov)

14. I am a manager at a fast food restaurant paid a salary and do not receive overtime. Does this law impact me?

Under California law, to qualify as an “exempt employee” for wage and hour purposes, you must receive a salary of at least two times the state minimum wage for someone working 40 hours a week and meet other specific requirements.  If your salary is less than $83,200 as a fast food restaurant employee starting on April 1, 2024, you are not an exempt employee.

15. I am an employer that operates a fast food restaurant inside of a larger store, and my managers oversee both the fast food restaurant and the rest of the store. What salary should I be paying my managers given they spend time managing both employees who work in the fast food restaurant and employees who work in other parts of the store?

For a manager to qualify as an “exempt employee” under California law, the employer must pay them at least two times the state minimum wage for someone working 40 hours a week, and the manager must meet other specific requirements, including the requirement that the manager must be engaged in exempt tasks for more than 50% of their worktime. If your employee is managing both fast-food restaurant workers and non-fast food restaurant workers, then two different statewide minimum wages would apply to determine the salary threshold for exemption-the fast food restaurant minimum wage for time overseeing the fast food restaurant work and the general statewide minimum wage for the time overseeing workers not assigned to, fast food restaurant work. An employer would have to calculate the blended rate on a weekly basis, based on the percentage of time spent on those tasks.

For example, a manager who, in the course of a workweek in April 2024, spends forty percent (40%) of their time overseeing the store’s fast food restaurant workers and sixty percent (60%) of their time managing the store’s other workers would have to be paid $1,408 to meet the minimum salary requirement for exempt status that week.  The math capturing this blending of rates follows: 

For time spent managing fast-food operations:  $20/hour x 2 x 40 hour fulltime workweek = $1,600 weekly salary x 40% = $640

For time spent managing store’s other operations: $16/hour x 2 x 40 hour fulltime workweek = $1280 weekly salary x 60% = $768

Blended rate:  $640 plus $768 = $1,408 salary for that week.

16. If a worker also gets paid tips, can an employer use the tips as a credit toward the obligation to pay the minimum wage?

No. An employer may not use an employee's tips as a credit toward its obligation to pay the minimum wage per hour.

17. I believe I am covered by the new law, but my employer says I am not. Since April 1, 2024, my employer has been paying me less than $20 an hour for the work I’ve performed. What should I do?

An employee who has not been paid the minimum wage can bring a legal claim to recover wages due and possibly related damages and penalties. Your employer will carry the burden of showing they are not covered by the new law.

Generally speaking, there are three ways to present such a claim - through the Labor Commissioner, through an alternative dispute resolution system such as arbitration (if required or allowed under an employment agreement), or through a lawsuit in court. Employees pursuing the first option can file an individual wage claim with the Labor Commissioner's Wage Claim Adjudication Unit, or they can file a Report of Labor Law Violation with the Labor Commissioner's Bureau of Field Enforcement, which does not pursue individual claims, but may investigate and cite the employer. More information about wage claims and employee rights in general is available on the Labor Commissioner’s website or from any of the Labor Commissioner's local offices.

18. I am a fast food restaurant employee, and a collector is attempting to garnish my wages-that is, get the money from my paycheck before I receive it. I understand that part of the hourly minimum wage that I make is protected from collection. Is the minimum wage for purposes of garnishment the fast food restaurant minimum wage?

Yes. When calculating the wages exempt from garnishment for a fast food restaurant employee, the party seeking to garnish the wages must use the applicable statewide fast food restaurant minimum hourly wage unless a higher, local minimum hourly wage exists.

Role of the Fast Food Council in Addition to the Minimum Wage

19. What is the Fast Food Council?

AB 1228 created the Fast Food Council.  The Fast Food Council is composed of appointed representatives from the fast food restaurant industry, fast food restaurant franchisees or restaurant owners, fast food restaurant employees, advocates for fast food restaurant employees, and one unaffiliated member of the public. The Council also has two non-voting members, one from the Department of Industrial Relations and one from the Governor’s Office of Business and Economic Development.

20. What will the Fast Food Council do?

The Council will meet regularly to develop new minimum employment standards specific to the fast food industry.  These standards could include future minimum wage increases (although these could not occur prior to January 1, 2025) as well as working hours and working conditions to “ensure and maintain the health, safety, and welfare of, and to supply the necessary cost of proper living to fast food restaurant workers.”

The hourly minimum wage established by the Council can increase every year by either 3.5% or the increase in the consumer price index, whichever is smaller. The Fast Food Council can establish a single statewide minimum wage for fast food restaurant employees or vary the minimum wage by region of the State.

The Council’s meetings will be open to the public, and the Council will take public comment on all action items.

March 2024