The minimum wage for fast food workers in California will increase by 2024, benefiting most of the Golden State’s 500,000 fast food workers. However, this measure has already begun to cause massive layoffs.
An agreement was reached on September 11 that ended a standoff between the industry and unions over wages and working conditions. It is estimated that AB 1228 will benefit nearly half a million workers who work for fast food chains, with at least 60 restaurants spread across the country, with the exception of restaurants that make and sell their own bread, such as Panera Bread. However, the more than 25% increase in salary is forcing companies to take severe measures.
Currently, fast food workers in California earn US$15.50 an hour, but starting April 1, 2024, they will have a minimum wage of US$20. A Council may propose further increases until 2029, adjusted for annual inflation.
This new Council will only have the power to set wages, but not to define industry labor standards for fast food restaurant workers, as was intended with the Fast Food Council.
The large operators of the Pizza Hut chain in California announced that they will lay off all their delivery drivers due to the new law that raises the minimum wage for fast food workers to $20 per hour. The layoffs will take place in February 2024.
Pizza Hut franchises will outsource shipping through apps like DoorDash, GrubHub and UberEats for pizza and food deliveries.
The Chipotle and McDonald’s chains have announced that they consider increasing menu prices in the state to try to compensate for the higher cost that the increase in the minimum wage of their workers will represent.
The main opponents of the new salary for delivery drivers in California are food delivery companies, such as Uber Eats, DoorDash, and Lyft, as well as employer unions such as the California Chamber of Commerce. Among their arguments are increased costs for consumers and restaurants, loss of jobs, and undermining the flexibility and autonomy of delivery drivers.
A total of 30 states and several cities set their own minimum wage rates, which are higher than the federal one. If federal, state, and local government minimum wages are different, the higher wage rate applies.
The Fair Labor Standards Act (FLSA) grants the right to obtain overtime pay. Most employees are entitled to a special rate of overtime pay for any hours worked over a total of 40 in a single workweek. The wage rate for overtime is at least one hundred fifty percent (150%) of the normal wage rate.
If employers fail to comply with the minimum wage law, they can face severe sanctions, including payment orders for back wages, interest for late or non-payment, liquidated damages, fines, and criminal proceedings with potential heavy fines and interest on unpaid wages.