Several fast-food franchises in California are laying off workers in anticipation of a legally mandated minimum wage hike that is slated to take effect in April. A new minimum wage law will award fast-food workers a 25% hourly raise, increasing the previous $16 per hour rate by $4, reported Inc.
The forthcoming law is essentially a compromise between owners, unions, and negotiators following the state's decision to raise the minimum wage of local fast-food workers. Major restaurant chains opposed the initially proposed $22 per hour rate, but many say the soon-to-be $20 hourly pay still comes with possible financial consequences. Pizza chains, notably Pizza Hut and Round Table Pizza, have already begun cutting an estimated 1,280 delivery jobs this year, per a Wall Street Journal report. Southern California Pizza Co. announced layoffs in December of around 841 drivers across the state, FOX Business said.
Small restaurants are also doing the same. Two San Jose-based Vitality Bowls restaurants are currently being run by two employees instead of the typical four. The restaurants’ owner, Brian Hom, told the WSJ that he is “definitely not going to hire anymore.”
The wage law concerns fast-food chains with 60 or more locations around the country. Chains exempted from the new law include those that “prepare and bake bread on-site to be sold as a standalone menu item,” FOX Business explained. Panera Bread was initially exempted until in February, when California Gov. Gavin Newsom said the chain must now comply with the law. The change in decision came after Newsom allegedly pushed for the exemption on behalf of billionaire Greg Flynn, a longtime donor of the governor, who owns two dozen Panera locations across the state.
