Restaurant Industry Insights

California’s AB1228: What Restaurant Owners Need to Know

California is known for its innovative and progressive policies, and it often leads the way in implementing new laws that have a ripple effect across the country. One such law is Assembly Bill No. 1228, which introduces significant changes to the fast-food restaurant industry in the state. While this bill primarily targets large fast-food chains (60+ units), it has far-reaching implications that restaurant owners in California and beyond should be aware of.

The Fast Food Council: What Is It?

Assembly Bill No. 1228 establishes the Fast Food Council within the Department of Industrial Relations. The Council comprises representatives from various stakeholders, including fast-food restaurant operators, franchisees, employees, advocates, and the general public. Its primary mission is to set minimum standards for fast-food restaurant employees, including wages, working conditions, and safety measures.

Key Provisions of AB 1228

  • Minimum Wage Increases: One of the most significant changes introduced by AB 1228 is the hourly minimum wage for fast-food restaurant employees. Starting from April 1, 2024, the minimum wage will be set at $20 per hour and may increase annually. The Council can raise the minimum wage by up to 3.5% or, based on the United States Bureau of Labor Statistics Consumer Price Index for Urban Wage Earners and Clerical Workers (U.S. CPI-W).
  • Fast Food Council Authority: The Council can develop minimum fast food restaurant employment standards, such as wage levels, working conditions, and training. These standards must prioritize fast-food workers’ health, safety, and welfare.
  • No Local Wage Regulation: AB 1228 prevents local jurisdictions, including cities and counties in California, from enacting or enforcing ordinances or regulations that set wages for fast-food restaurant employees. However, general minimum wage laws applicable to all industries can still be established.

Impact on Smaller Businesses in California

While AB 1228 primarily targets large national fast-food chains, its implications extend to smaller, independent restaurants in California. The substantial increase in the minimum wage for fast food employees and any additional changes in working conditions could create wage and working conditions competition in the industry. Smaller restaurants, already operating on thin profit margins, may find it challenging to match the wages or working conditions improvements offered by larger fast-food chains. 

Impact Beyond California

AB 1228 sets a precedent that could influence labor regulations in other states, especially those with a history of progressive labor policies. National fast-food chains may face pressure from employees in other states to keep pace with wage increases or working condition improvements made in California. Restaurant owners should stay informed about developments in labor regulations in their regions.

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