Fast food workers are losing their jobs in California as new minimum wage law takes effect

March 28, 2024 in News by RBN Staff



Among the chains announcing cuts ahead of a $4 increase to the minimum wage in California are Pizza Hut and Round Table Pizza.
The state’s minimum wage will rise to $20 on April 1.

An earlier version of this story attributed the combined number of eliminated positions to a single company. The story has been updated to reflect some of the anticipated cuts at individual employers.

Fast food workers are losing their jobs in California as more restaurant chains prepare to meet a new $20 minimum wage set to go into effect next week.

Restaurants making cuts are mostly pizzerias, according to a report published by The Wall Street Journal. Multiple businesses have plans to axe hundreds of jobs, as well as cut back hours and freeze hiring, the report shows.

Democratic Gov. Gavin Newsom signed the Fast Act back in September to require fast food chains with 60 or more locations nationwide to meet that wage increase after labor unions fought for it alongside the healthcare industry, which will also see a boost to earnings in June.

“This is a big deal,” Newsom said alongside union members in September. “That’s 80% of the workforce.”

Layoffs began last year

Pizza Hut is laying off more than 1,000 delivery drivers in California, according to federal and state filings. Fast-food workers in the state are set to get a pay bump in April 2023 as the minimum wages rises from $16 to $20 an hour.

Pizza Hut announced cuts to more than 1,200 delivery jobs in December, previous reporting by USA TODAY shows. Some Pizza Hut franchises in California also filed notices with the state saying they were discontinuing their delivery services entirely, according to Fox Business.

“Where select California franchisees have elected to make changes to their staffing approach, access to delivery service will continue to be available via Pizza Hut’s mobile app, website and phone ordering and the customer ordering experience will remain consistent,” a Pizza Hut spokesperson told USA TODAY Wednesday.

Excalibur Pizza, a franchisee of Round Table Pizza, has plans to cut 73 driver jobs in April, which amounts to 21% of its workforce, the company confirmed with USA TODAY Wednesday.

“The franchisee is transferring their delivery services to third-party. While it is unfortunate, we look at this as a transfer of jobs,” a company rep told USA TODAY. “As you know, many California restaurant operators are following the same approach due to rising operating costs.”

No exemptions, Newsom says

The legislation indicated that businesses that “feature ice cream, coffee, boba tea, pretzels, or donuts” could meet the definition of a “fast food restaurant covered by the law,” according to The National Law Review’s breakdown of the bill. The law could extend to similar businesses that provide things like sweets and drinks.

Greg Flynn, who has monopoly over Panera franchises in California, tried to get out of the state’s new mandate earlier this year, according to Bloomberg, holding fast to a loophole that restaurants making in-house bread do not have to boost employee earnings.

Newsom’s office called the claim “absurd,” telling the Los Angeles Times that the restaurant chain would see no such exemption.

Chipotle’s CFO told Yahoo Finance that the company will be forced to increase their prices to comply with the minimum wage increase. Starbucks told the outlet it is evaluating the impact of the Fast Act but did not comment on whether or not it would comply. It is unclear whether or not the franchise would be considered a “fast food restaurant” under the new legislation.

Starbucks has committed to at least a 3% increase to wages that went into effect ON Jan. 1, according to a statement put out by the company.

The coffee chain did recently close seven of its stores in the state of California, USA TODAY previously reported.