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Increase in Minimum Wage for Restaurant Industry Workers (and Exemptions)

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For decades, restaurant workers have struggled financially due to no increase in the minimum wage. However, thanks to the hard work of unions and new legislation, many workers in the food and restaurant industries may see wage increases this year.

More than half of U.S. states increased their minimum wage in 2023 in a move to help solve the national labor crunch, and restaurant workers are seeing an even greater increase than workers in many other industries.

History of Tips vs. Fair Wages

The tradition of paying workers less, because they earn tips from those they serve, has an adverse history. This practice began in the 1860s when an established group of white restaurant owners in Chicago, offered tips as a replacement for living wages to newly freed Black workers.

When Chicago restaurateurs later founded the National Restaurant Association in 1919, this form of restaurant worker pay was institutionalized. Even though other Black majority occupations, such as the Black Pullman car porters, successfully won actual wages.

The federal minimum hourly wage is only $7.25 and has not seen an increase since 2009. This leaves millions of Americans unable to earn a livable wage. A federal bill called the Raise the Wage Act of 2023 has been introduced in Congress that would gradually raise the minimum wage nationally to $17 an hour by 2028. The bill would also raise and eventually eliminate subminimum wages for tipped workers so that all workers would be at the same wage level.

While California has raised its minimum wage to $15.50 for 2023, this significant improvement will still leave workers at a pay rate hard to live by. According to the Living Wage Calculator created by MIT, a living wage for a single person with no children living in California is $21.24 per hour. Fast food workers around the country are watching California closely as the state fights to enact new fast food worker legislation.

California’s FAST Act

In California, the Fast Food Accountability and Standards Recovery Act (FAST) was introduced in response to the many complaints and reports from fast food workers about safety violations during Covid. Long known as an industry with low pay, few benefits, little job security, and lots of abuse including wage theft, sexual harassment, and discrimination, this bill seeks to improve pay and conditions for what is California’s largest group of low-wage workers.

Even though California’s minimum wage is one of the highest in the nation, Governor Gavin Newsome is fighting for further reforms with the passage of this new law, AB 257, the Fast Food Accountability and Standards (FAST) Recovery Act.

FAST will establish a 10-person council with the ability to regulate the wages, hours, and other working conditions for fast food workers in restaurant chains with more than 100 locations nationwide that share a common brand, including franchises.

The council will work to adjust the minimum wage for the fast food industry annually based on the Consumer Price Index. This council will be empowered to increase the minimum wage for fast food workers to a maximum of $22 per hour, which would allow fast food workers to earn a liveable wage.

The law defines a fast-food restaurant as one that provides food for customers:

·         To eat immediately either on-site or off-premises.

·         Who both select and pay for their meal before eating.

·         Whose meal contains items prepared in advance, including items prepared in bulk and kept hot or items prepared and heated up quickly.

Exemptions to FAST

There are some cases in which FAST will not apply:

·         Restaurants that offer table service, except where orders are placed by customers on an electronic device

·         Bakeries where bread is for sale as a standalone item and not part of a menu item such as a sandwich

·         Grocery stores that operate a restaurant within its premises where the people who work in the restaurant are employed by the grocery store.

·         Establishments covered by a valid collective bargaining agreement

·         Health and safety issues covered by California OSHA (Occupational Health and Safety Administration)

FAST on Hold

Fast food employers lost no time in trying to topple the FAST Act. An injunction was granted to keep the measure on hold and a referendum on the FAST Act will be added to the November 2024 ballot. During this election, voters will decide whether the law should be ratified or repealed.

However, Fast Act supporters in government introduced a new bill, Assembly Bill 1228 entitled the Fast Food Franchisor Responsibility Act (FFRA). While this bill does not address wages, it does attempt to rectify health and safety issues as well as those of equity. The bill is comprised of four provisions calling for:

·         Franchisors must share in the legal responsibilities and liabilities incurred by their franchisees for their violations of employment standards and worker health and safety laws

·         Franchisors must share in any penalties imposed on the franchisee

·         The ability for franchisees to sue franchisors for monetary relief if the terms of their franchise agreement impede their ability to comply with the law

·         Written notice of an alleged violation, giving the franchisor 30 days to rectify the violation.

Potential Legal Issues May Lie Ahead

The FAST Act is a complex piece of legislation directed toward an industry riddled with problems and injustices. And the legal actions and suits will likely be many. In addition, the newer FFRA legislation, when passed could enable fast food workers to come forward with health and safety issues.

People who work in the industry and feel they are working under adverse conditions under FAST or FFRA should consult an attorney to gain more information on what they might be entitled to and whether they are covered under these laws.


Gomez Law has a long track record in employment law, helping clients with issues of discrimination, a hostile work environment, and wage and hour disputes. For help, contact Gomez Trial Lawyers today for a free consultation by calling 866-TRIAL LAW (866 874-2552) or by contacting us online.


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