Workforce

California bill would expand exemptions to the pending $20 fast-food wage

An architect of the bill setting the new wage has proposed excusing quick-service restaurants in a number of locations, including casinos, sports arenas and state-owned beaches.
Gov. Newsom signed the Fast Act into law, then threw support behind an alternative. | Photo: Shutterstock

A bill introduced in the California legislature would greatly increase the types of quick-service restaurants that will be exempted from paying fast-food workers a wage of at least $20 an hour starting April 1.

The places excused from paying that much would include fast-food restaurants in casinos, airports, theme parks, hotels, sports arenas, convention centers, racetracks and museums.

Also exempted would be contractor-run fast-food restaurants located in so-called noncommercial settings, including office buildings and state-owned beaches or other recreational facilities.

The sponsor of AB 610, Assemblyman Chris Holden, did not divulge his reasons for proposing the exemptions. His office did not respond to a request for clarification by the time of this posting. Holden was also the sponsor of the bill setting the new $20 fast-food wage.

Currently, the only types of limited-service restaurants in California that would be exempted from paying $20 an hour are units of chains with fewer than 60 stores nationwide; outlets that were also functioning as a bread-selling bakery on Sept. 15, 2023, a provision known as the Panera Exemption; and quick-service restaurants within supermarkets.

The minimum wage for all other fast-food places within the state will rise to $20 an hour at the start of April under a controversial law that was passed as a compromise between the state’s quick-service industry and organized labor. The new pay floor amounts to a 29% increase in the minimum wage.

An estimated 500,000 fast-food workers within the state will be entitled to the new minimum.

The bill, AB 1228, supplanted a piece of legislation bitterly opposed by the restaurant industry because of the radical changes it made in the way quick-service employees’ wages and workplace standards were set. Responsibility for those matters would have shifted from the legislature to a Fast Food Council composed of fast-food employees, union representatives, fast-food employers and government officials. Employees and employers would have in effect had equal voting power on wage increases.

The dropped bill, known as the Fast Act, would have also increased fast-food franchisors’ liability for the labor policies of franchisees by defining the distinct parties as “joint employers.”

The industry announced that it would challenge the Fast Act by putting it to a referendum vote in the general election of November 2024.

California Gov. Gavin Newsom countered that challenge by reviving a mechanism for setting fast-food wages that the industry viewed as even more of a business threat. The governor earmarked funds for the revival of the Industrial Welfare Commission, an antiquated, long-defunct agency with almost unlimited power to set wages.

Using that threat as leverage, Newsom convinced the industry to accept the creation of a Fast Food Council, though with new limits on its power. Wages could only be raised in increments of 3%, and the Council could only recommend changes in workplace standards, instead of mandating them.

The $20 wage is now set to take effect April 1, as planned.

Holden’s bill expanding the exemptions has yet to be assigned to a committee or otherwise shepherded forward.

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