After some confusion regarding the new $20 fast food minimum wage law, California created some last minute exemptions to help clarify which restaurants are required to pay the new minimum wage. However, the last minute exemptions are narrowly tailored, and the new minimum wage likely applies to most fast food restaurants in California. On a practical level, these narrow exemptions will likely have little impact on the cost of labor for employers. For example, if workers are doing the same jobs at both an airport McDonald’s and a stand-alone McDonald’s, there is little incentive for the workers to continue to work at the airport for less pay. Clearly, a pay increase will likely occur across all facets of the fast food industry.

Most people are aware of California’s new $20 fast food minimum wage, but some are uncertain whether or not the minimum wage increase applies to their particular restaurant or shop- especially in light of the last minute exemptions signed into law. The phrases “fast food restaurant employee,’ “limited-service restaurant,” and “establishment” are defined in the new law. It is important to be certain whether or not your restaurant is required to pay broadly reaching $20 minimum wage or if you may fall into an exemption, which is discussed in a later blog.

With taxes on the minds of many business owners, here is a gentle reminder for next year: for the 2024 tax year, the Form 1099-K could be sent to anyone who used payment services, apps, and online marketplaces to accept payment (such as CashApp, Zelle, Venmo, etc). In addition, the reporting threshold lowers dramatically. For the 2024 tax year, the IRS threshold for reporting will drop down to $5,000. Eventually, the IRS will drop the threshold down to $60 which was set by the American Rescue Plan passed in March of 2021. Although the IRS is taking steps to lower the threshold in phases, it is important for business owners to be aware of these changing reporting requirements and threshold amounts.

Minimum wage increases in 22 states. Some of the largest increases for an hour’s worth of work are found in Delaware, Hawaii, Illinois, Maryland, Nebraska, New Jersey, New York, and Rhode Island. These states increased their minimum wage by at least $1 or more, with some topping the charts at an increase of at least $2.00 an hour (i.e. Hawaii and Maryland).

Beginning this July, California bars and nightclubs must now add “drug testing devices” to their regular inventory. If you own a bar or nightclub, you likely have a Type 48 liquor license, which is one of the most highly sought after, most expensive, and difficult liquor licenses to obtain. As a result, it is no surprise that California is now imposing yet another requirement on these licensees. Any licensee that is applying for a new Type 48 liquor license or currently holds on existing Type 48 liquor license is required to offer for sale at a reasonable price or provide for free a drug testing device.

A California family-run moving company, Meathead Movers, is being sued by the Equal Employment Opportunity Commission for age discrimination due to “potential discouragement bias” against a hypothetical person because the moving company put out advertisement seeking athletic, strong, fit, and capable people for moving furniture and boxes of belongings. Employers are now facing the additional burden of this obvious word game: careful how you advertise for employees because bias or discrimination may now be inferred even when no one comes forward claiming discrimination- possible discouragement of a hypothetical person may be enough.

California employers are tasked with new notice requirements! Employers must give notice to all current and former employees employed after January 1, 2022 whose contracts included a noncompete clause (or who were required to enter a noncompete agreement) that such clauses or agreements are void. This notice must be given to the employees by February 14, 2024. The notice has to be individualized for each employee, in writing, and shall be delivered to the employee’s or former employee’s last known address and email address. This is a significant task and employers should plan their compliance ahead of time.

California’s new controversial law (SB 699) codified in California Business and Professions Code section 16600.5 now extends California’s restriction on non-compete agreements to even perfectly legal out-of-state non-compete agreements. California wants to attract the best workers in the nation and now will refuse to enforce ANY non-compete agreements at all - even those that other states recognize. Employers have no right to enforce non-compete agreements in California.

Fast food franchisees confirm that they will be increasing menu prices to offset the staggering increase in labor costs due to California’s new $20 minimum wage for all fast food workers. However, the California legislature, in establishing California’s new fast food worker minimum wage, may have failed to deliver high wages to California fast food workers. If the menu prices increase significantly, the fast food workers may find that their higher wages do not significantly increase their buying power at their own workplace- and perhaps in other areas of their life. In addition, if fast food franchisees choose to go fully automated and not hire employees, there are no higher wages for these workers because there will be no wages at all.