Why some California businesses are exempt from fast food minimum wage hike

The newly enacted $20-an-hour minimum wage hike for fast food workers that went into effect in California on Monday won’t apply to chains that have locations in airports, hotels, event centers, theme parks, museums and grocery stores.

Last fall, California Gov. Gavin Newsom signed into law Assembly Bill 610, which raised the minimum wage for workers employed by fast food chains from $16 an hour to $20 an hour.

Companies including McDonald’s and Chipotle warned that the increased labor costs would be passed on to the consumer by hiking menu prices.

Scott Rodrick, a franchisee who operates 18 McDonald’s locations in and around the San Francisco Bay Area, said he had to hike menu prices though he would refuse to charge $20 for a Happy Meal.

According to the legislation, chains that operate a location in what the law calls a “grocery establishment” — which is a retail space that measures more than 15,000 square feet and which sells “primarily household foodstuffs for offsite consumption — will be exempt from the law.

The law stipulates that the “grocery establishment” must also earn 50% of its gross income from selling household foodstuffs for offsite consumption and employ the workers who man the fast food restaurant.