California Fast-Food Chains Laying Off Workers Ahead Of $20-an-hour Minimum Wage Law

California fast-food restaurants are laying off workers since the state minimum wage will be $20 per hour starting April 1, The Wall Street Journal reported. 

The bill was signed last September  

California Governor Gavin Newsom raised minimum wages in September 2023. The bill AB 1228 is a massive jump from $16 per hour, which was below the California Poverty Measure for a family of four. Fast-food chains have less than a week to determine the new law, and reports are highly damaging. 

Laying off 1,280 delivery drivers 

According to the WSJ, Pizza Hut and Round Table Pizza already presented plans to cut off 1,280 delivery drivers. Pizza Hut informed some workers about their last day on the job. One driver, who received the notice in December, had been working for the company for nearly a decade but now has to claim unemployment. 

More layoff confirmations 

Round Table Pizza’s spokesperson told the Post the ongoing changes will likely increase prices. They also confirmed they are laying off delivery drivers and will likely use third-party delivery, which will increase delivery prices. The fast-food chains and customers will have to rely on DoorDash and Uber Eats in the coming months. 

Working on low-capacity 

Brian Hom, owner of two Açaí Bowl restaurants in the San Francisco Bay Area, has two instead of four workers and plans to raise prices by 10 percent. He also told the Wall Street Journal that he is considering moving his business to another state. 

Others are open to increasing prices 

McDonald’s and Chipotle confirmed they would raise menu prices in California due to the new law. A KFC worker told the California Globe that their hours were already being cut. The worker said he was looking for an additional job, like many other fast-food workers, and he believed that the bill would be helpful. However, since the business can’t keep up, it only hurts the workers. 

Restaurants are preparing for a different fall 

A KFC franchisee told the Globe that, in the fall, the restaurants would look considerably different. They shared they were not monsters but business owners trying to survive the changes. The same person said that people who get frustrated over customer service or people having to do two or three jobs can complain about the bill. 

Arby’s owner on the issue 

Speaking to Globe, an Arby’s owner whose restaurant is in Upstate California discussed that the bill did not consider the additional expenses in LA, including taxes. The person also said that owners get fewer customers in places with lower taxes. They added that the cost of living and employees are only a part of the equation. 

Robots in salsa 

El Pollo Loco reportedly said it would be testing using robots in salsa making. Jack in the Box, which has nearly 1,000 locations in the state, is allegedly testing fryer robots and automated drink dispensers. 

The Panera Bread topic 

Newsom’s campaign donor and the Panera Bread owner told AP that the company will follow the $20 minimum wage starting April 1. However, some outlets still report that the chain will be saved from increased wages due to the Fast Food Accountability and Standards Recovery Act (FAST Act), which includes exemptions for “chains that bake bread and sell it as a standalone item.”

Remains to be solved 

The issues with Panera Bread restaurants will likely be put to rest in April. Until then, there have been numerous speculations and theories about the chain owner Greg Flynn and Governor Newsom. The two reportedly went to the same school, and the owner of 24 Panera Bread locations across California often donates to Newsom’s campaigns. Newsom’s office and Flynn rejected any assumptions. 

Other exemptions

Assembly Bill 610 offered more exemptions to fast-food restaurants in airports, hotels, event centers, theme parks, museums, gambling establishments, corporate campus cafeterias, etc. The voting for the bill was also controversial since Republican Minority Floor Leader Assemblyman Heath Flora voted “yes” while Republican Leader Gallagher voted “no.” Many GOP representatives were absent. 

This is just the beginning

The bill aims to increase the wage for fast-food workers by 3.5% annually through 2029. California lawmakers voted to gradually increase the minimum wage for healthcare workers to $25 an hour in a separate bill over the next decade. Newsom did not say whether he would sign this bill since the issue is more complex due to the Medicaid program.

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