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Fast Food Worker Minimum Wage and Exempt Salary Increase

Minimum Wage Increase

Beginning April 1, 2024, the minimum wage for many fast food employees will be $20 per hour.

This new minimum wage applies to employees who work for a fast food restaurant in California that’s part of a national fast food chain. The law defines a national fast food chain as a group of limited-service restaurants that meets the following three criteria:

  • It has more than 60 establishments across the country
  • It shares a common brand, or has standardized options for appearance, marketing, packaging, and offerings
  • It’s primarily engaged in providing food and beverages for immediate consumption that customers select and pay for upfront with minimal or no table service

In addition to the original exemptions for certain bakeries and restaurants inside grocery stores, the law will not apply to restaurants that are any of the following:

  • Located in an airport
  • Connected to or operated in conjunction with a hotel, event center, theme park, museum, or gambling establishment
  • Located in and operated in conjunction with a for-profit corporation’s office building or campus, are primarily serving the corporation’s employees or its affiliates, and are part of a concession or food service contract covering the building or campus
  • Located on land owned by the government and operated pursuant to a concession or food service contract

Please note that each of these exemptions has a more detailed definition under the law, which you should make sure applies before considering your establishment exempt.

Required Notice

Employers with covered employees are required to post a supplement to the minimum wage order in a place where employees will frequently see it.

Future Increases

The newly created Fast Food Council will have the authority to raise this minimum wage annually beginning January 1, 2025.

Exempt Salary Increase

In the 11th hour, the California Department of Industrial Relations has updated its FAQs to indicate that the April 1 minimum wage increase for fast food workers will also increase the minimum salary threshold for exempt executive, administrative, and professional (EAP) employees in fast food restaurants.

The new minimum salary for EAP employees will be $83,200 per year. This increase is happening because under California law, EAP employees must earn a monthly salary of at least two times the state minimum wage, and the new $20 rate will function as the state minimum wage for fast food restaurant employees.

As a reminder, the law only applies to restaurants that are part of a fast food chain with 60 or more locations.

Affected employers have two options:

  1. Ensure that employees in EAP positions are paid $83,200 per year, or
  2. Reclassify these employees as nonexempt and provide them with the rights and benefits that nonexempt employees are entitled to (overtime, breaks, lunches, and reporting time pay, to name a few)

Of note, there’s legislation currently pending that would create additional exemptions to the law if signed. We’ll let you know about any significant changes.

The state’s FAQs have not been completely updated yet, but Resourcing Edge expects that they will be shortly. The updated law contains the new sections in blue italics.

2023 Pay Data Reporting Updated for Reports Due May 8, 2024

On February 1, 2024, the California Civil Rights Division (CRD) issued updated FAQs and the following important information about the 2023 pay data reporting year:

  • Updated Resources. New versions of the pay data reporting Excel templates, .CSV examples, user guide, training slides, and portal. Some key details:
    • Employers are not to use Excel templates or .CSV examples from prior years; the portal will reject submissions based on outdated versions of the templates.
    • The CRD updated the portal and templates to improve user experience. For example, in the Excel template, a user can hover their cursor on a column heading to see relevant instructions.
    • Training about the pay data program and filing requirements.
  • New data fields. Employers must newly report whether employees worked remotely during the Snapshot Period. For more information, see FAQs “Who is a ‘remote worker’ in a pay data report?” and “If an employee who was remote the first six months of the year transitioned to a hybrid or in-person role during the second six months of the year, should the employee be reported in a pay data report as a remote worker?”
  • Race, ethnicity, sex. For Labor Contractor Employee Reports, reporting “unknown” race/ethnicity or sex of a labor contractor employee is no longer permitted. For more information, see Part V.B of the FAQs.
  • Deadline. Pay data reports covering the 2023 Reporting Year are due by Wednesday, May 8, 2024. For more information, see FAQ “What is the deadline for employers to submit their pay data report(s) to CRD?”
  • Changes made in 2023 remain in effect, including:
    • Labor contractor worker reporting: In addition to the Payroll Employee Report that all private employers with 100 or more employees (with at least one employee based in California) must file, under the law, private employers with 100 or more workers hired through labor contractors in the prior calendar year (with at least one worker based in California) must file a separate Labor Contractor Employee Report that covers workers hired through labor contractors in the prior calendar year. An employer submitting a Labor Contractor Employee Report submits one report that covers labor contractor workers at all the employer’s establishments. Labor contractor(s) must give the required data and information to the employer for the report and employers must identify the labor contractors. For more information about Labor Contractor Employee Reports, see Parts II, IV, and V of the FAQs, among others.
    • Mean and median rates: The law requires employers to calculate and report the mean and median hourly rate of its payroll employees and/or labor contractor employees, by establishment, pay band, job category, race/ethnicity, and sex. There are columns in the Excel template and .CSV example for this and for more information about calculating the mean and median hourly rates, see Part V of the FAQs.
    • Increased penalties for nonfilers: Failure to file may incur penalties and the CRD is actively pursuing non-filers. For more information, see FAQ “What are the penalties for employers that fail to file?”
    • Report only California workers: In a pay data report, employers must report on their workers assigned to California establishments and/or working within California. Employers may not report on workers who are working outside of California and assigned to an establishment outside of California. For more information, see, for example, FAQ “Should an employer’s Payroll Employee Report include only their California employees or all employees?”
    • Aggregate results: In 2024, the CRD plans to publish aggregate results from the 2022 Reporting Year and employers are encouraged to review these results, as well as to assess their own pay data reports and pay practices, in light of California’s anti-discrimination and equal pay laws.

Under California law, private employers of 100 or more employees—and/or 100 or more workers hired through labor contractors—are required to annually report pay, demographic, and other workforce data to the CRD. Employers must use the California Pay Data Reporting online portal to submit their annual reports to CRD.

Workplace Violence Prevention Plan Required

Effective July 1, 2024, almost every employer must include a written workplace violence prevention plan as part of its injury prevention program. The plan must always be in effect, designed specifically for each work area and operation, and include the following:

  • Names and titles of people responsible for the plan
  • Plan development procedures that include employee involvement
  • Implementation and training methods
  • Response procedures and antiretaliation protections
  • Compliance procedures for supervisory and nonsupervisory employees
  • Communication methods
  • Hazard identification and correction procedures
  • Post-incident response and investigations
  • Efficacy and annual review

Employers must also record information in a violent incident log for every workplace violence incident. The law also addresses the creation and maintenance of the violent incident log, mandatory training, reporting workplace violence, recordkeeping, and much more.

Of note, the following are exempted from the law:

  • Workplaces with less than 10 employees working there at any given time, that aren’t accessible to the public, and that comply with the state’s injury and illness prevention program requirements; and
  • Employees teleworking from a location of their choice that is not under the employer’s control.

Further information and guidance to come.

Healthcare Worker Minimum Wage Increases

Effective June 1, 2024, the minimum wage for healthcare employees will incrementally increase depending on the employer. For healthcare providers with 10,000 or more full-time equivalent employees that are part of an integrated healthcare delivery system and any dialysis clinic, the minimum wage for all covered healthcare employees will be:

  • $23 per hour from June 1, 2024, to May 31, 2025.
  • $24 per hour from June 1, 2025, to May 31, 2026.
  • $25 per hour from June 1, 2026, until annually adjusted.

For hospitals with a high governmental payor mix, independent hospitals with elevated governmental payor mix, and rural independent healthcare facilities, the minimum wage for all covered healthcare employees will be:

  • $18 per hour from June 1, 2024, to May 31, 2033, with 3.5% annual increases.
  • $25 per hour from June 1, 2033, until annually adjusted.

For primary care or free clinics, community clinics, rural clinics, and their affiliated urgent care clinics, the minimum wage for all covered healthcare employees will be:

  • $21 per hour from June 1, 2024, to May 31, 2026.
  • $22 per hour from June 1, 2026, to May 31, 2027.
  • $25 per hour from June 1, 2027, until annually adjusted.

For all other covered healthcare facility employers, the minimum wage for all covered healthcare employees will be:

  • $21 per hour from June 1, 2024, to May 31, 2026.
  • $23 per hour from June 1, 2026, to May 31, 2028.
  • $25 per hour from June 1, 2028, until annually adjusted.

After September 6, 2023, any local law related to the minimum wage for covered healthcare facility employees is void.

Supreme Court Issues Ruling on Hours Worked

On March 25, 2024, the California Supreme Court issued a decision in Huerta v. CSI Electrical Contractors that answered questions about which activities were “hours worked” and requires employers to pay employees at least the state minimum wage for those activities.

While some of the court’s findings were industry specific, the court made two notable rulings applicable to all employers:

  • Language in Wage Order 16 (which is also contained in the other wage orders) defines hours worked as “the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.” Employers must pay employees for time spent on the employer’s property while leaving work, waiting to scan badges, and undergoing a search required by the employer, for the employer’s benefit, as these activities qualify as hours worked.
  • When an employer prohibits employees from leaving the property or a designated area during meal breaks (provided under Cal. Lab. Code Ann. § 512(a)), and this prevents employees from engaging in activities that they otherwise would have been able to do, the break qualifies as hours worked, and employees are entitled to at least minimum wage.
HR Services Team
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