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California Fast-Food Worker Minimum Wage Impacts Exempt Salary Levels for Those in the Industry 

The California Department of Industrial Relations has recently updated its frequently asked questions (FAQs) to provide important information regarding the minimum wage increase for fast-food workers. The updated guidance indicates that this wage increase will also affect the minimum salary threshold for exempt executive, administrative, and professional (EAP) employees working in fast-food restaurants. 

Under California law, EAP employees must earn a monthly salary that is at least twice the state minimum wage. Since the new minimum wage for fast-food restaurant employees will be $20 per hour, the minimum annual salary for EAP employees in these establishments will be $83,200. 

It is important to note that this law applies specifically to “fast-food restaurants” meeting certain criteria. To be considered a fast-food restaurant, the establishment must meet all of the following criteria: 

  1. The restaurant must be a “limited-service restaurant” in California, where customers order and pay for food or beverages before consumption, typically with limited or no table service. 
  2. The restaurant must be part of a restaurant chain consisting of at least 60 establishments nationwide. Administrative, warehouse, or food preparation locations that do not serve customers are not included in the count of “establishments.” 
  3. The restaurant’s primary business must involve selling food and beverages for immediate consumption. 

There are certain exceptions to this law. Restaurants operating a stand-alone bakery that produces and sells bread as a distinct menu item as of September 15, 2023, and continue to do so are exempt. Additionally, the law does not apply to restaurants located inside grocery stores, airports, hotels, event centers, theme parks, museums, gambling establishments, or for-profit corporations’ office buildings or campuses if they primarily serve the corporation’s employees or affiliates under a concession or food service contract. Lastly, the law also does not apply to restaurants operating on government-owned land under a concession or food service contract. 

Next Steps 

Employers falling within the scope of this law must ensure that EAP employees receive the minimum salary of $83,200 per year or reclassify them as non-exempt employees, providing them with overtime rights and benefits as applicable to non-exempt workers. 

It is essential for affected employers to review the updated FAQs and seek legal counsel to ensure compliance and manage any necessary adjustments in line with the new requirements. 

HR Works, headquartered in Upstate New York, is a human resource management outsourcing and consulting firm serving clients throughout the United States for over thirty years. HR Works provides scalable strategic human resource management and consulting services, including: affirmative action programs; benefits administration outsourcing; HRIS self-service technology; full-time, part-time and interim on-site HR managers; HR audits; legally reviewed employee handbooks and supervisor manuals; talent management and recruiting services; and training of managers and HR professionals.