California has added a few last minute narrow exemptions to this new law. If your restaurant qualifies under one of these exemptions, California’s new $20 minimum wage law does not apply to your restaurant.

• Bread Exemption: This is probably the most controversial exemption because there was some initial confusion as to whether or not restaurants like Panera would be included under this exemption. There are several caveats that employers and business owners need to know. To qualify for this exemption, your restaurant must -

  • sell bread as a stand-alone item on the menu,

  • ensure that the bread sold weighs at least half a pound after cooling (which means restaurants that sell little baked goods like muffins, croissants, scones, rolls, buns do not qualify),

  • produce the bread, meaning your restaurant must be making the dough and baking it (i.e. if the dough is mixed or prepared elsewhere and then brought to the restaurant, the restaurant does not qualify under this exemption),

  • and have been operating the bakery continuously since at least September 15, 2023 (meaning you cannot simply add a bakery to your restaurant now in order to be exempt).

• Grocery Establishment Exemption: A restaurant is exempt from the new law if it is located in a grocery establishment if it can meet two requirements -

  • First, the restaurant must be in a grocery establishment which is defined as a retail store that is over 15,000 square feet and sells primarily food that are not for immediate consumption (think of typical groceries like fresh meat, fish, chicken, canned foods) with any sale of other household supplies or products which are secondary. That means over half of the earnings comes from the food sales.

  • Second, the grocery establishment employer also employs the individuals working in the restaurant.

• Restaurants connected to or operating in conjunction with another entity:

  • To qualify under this exemption, the restaurant has to be connected to or operating with any of the following:

    • an airport

    • a hotel

    • an event center (which is over 20,000 square feet or has more than 1,000 seats, i.e. baseball stadium, concert hall, racetracks)

    • a theme park

    • a museum

    • or gambling establishment (such as a card room).
      

• Restaurants subject to a concession agreement or food service contract if the restaurant is-

  • in a building or campus primarily used by one for-profit company if that restaurant is primarily serving that company, i.e. restaurants in the office building of a company that serves meals for that company’s employees.

  • on public land such as a public beach, park, historic district, or operated by port authority.

On a practical level, even with these narrow exemptions, the minimum wage will likely go up across the board in all facets of the fast food industry. After all, why would anyone want to work at the airport McDonald’s and make less than the person doing the same job working at the stand-alone McDonald’s? If the workers are doing the same jobs at both the airport McDonald’s and the stand-alone McDonald’s, there is little incentive for the workers to continue to work at the airport where the employer is entitled to pay the worker less per hour. Clearly, a pay increase will likely occur across all facets of the fast food industry.