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.
According to a report published by The Wall Street Journal, restaurants making cuts are mostly pizzerias. Multiple businesses plan to axe hundreds of jobs, cut back hours, and freeze hiring.
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.”
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 a 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 in wages that went into effect on Jan. 1, according to a statement released by the company.
USA TODAY previously reported that the coffee chain recently closed seven of its stores in California.