Fast Food Minimum Wage: California Employer Guide
The California fast food minimum wage, who is covered, the exempt manager threshold most operators get wrong, exemptions, and a compliance checklist.
Fast Food Minimum Wage
What California operators owe, who is covered, and the manager threshold most people miss
Most operators who get the California fast food minimum wage wrong do not get the $20 wrong. The $20 is easy. It is on every poster and in every news story, and payroll systems handle it fine.
What they get wrong is the manager. Under California law an exempt employee must earn at least twice the applicable minimum wage, and AB 1228 makes $20.00 the applicable minimum wage for covered fast food employees for all purposes. That means a covered fast food manager must earn $83,200 to stay exempt, not the $70,304 that applies to every other California employer. Pay them $75,000, feel comfortable because that clears the state threshold by a wide margin, and you have just created a non-exempt employee who is owed overtime.
This guide is written for the operator, not the worker. It covers the current rate, the three-part coverage test, the AB 610 exemptions that get people out from under this, the exempt manager threshold in detail, what misclassification actually costs in California, the posting requirement, how local ordinances interact, and where the rate is headed.
The Current Rate
The rate has been $20.00 since April 1, 2024, and it applies from an employee's first day. There is no probationary rate, no training rate, and no variation by role. A dishwasher, a cook, a cashier, a drive-thru operator, and a shift lead at a covered restaurant all start at $20.00 an hour minimum. A shift lead who gets a lead differential gets it on top of $20, not instead of it.
For context, California's general state minimum wage rose to $16.90 on January 1, 2026. So a covered fast food restaurant is paying $3.10 an hour more than the business next door, per employee, per hour.
Who Is Covered
Coverage under AB 1228 is a three-part test, and all three parts must be satisfied. Miss one and the $20 rate does not apply to you.
Two points that catch operators out.
The 60-location count is at the brand level, nationally. If you are a franchisee with two locations in Sacramento and the brand has 300 establishments across the US, you are covered. Your personal footprint is irrelevant. The California DIR is explicit that AB 1228 applies regardless of whether the employer owns the national brand or franchises it. The statute itself, AB 1228, added sections 1474 through 1476 to the Labor Code.
The immediate-consumption test is a revenue test, not a vibe test. It is more than 50 percent of gross revenue. The DIR gives the example of a pizza chain earning 30 percent of revenue from take-and-bake and 70 percent from fully cooked food: that chain is covered. Flip the ratio and it is not.
The AB 610 Exemptions
AB 610 amended the law in 2024 and carved out a meaningful set of establishments. If you assumed you were covered without checking this list, check it.
| Exempt Category | Detail |
|---|---|
| Restaurants in airports | Location-based exemption. The restaurant is inside the airport. |
| Restaurants in hotels | Includes restaurants operating within hotel premises. |
| Restaurants in event centers and theme parks | Location-based. Covers venue and park food service. |
| Restaurants in museums (public or private) | Location-based exemption added by AB 610. |
| Restaurants in gambling establishments | Location-based exemption. |
| Restaurants on a single-corporation office campus | In a building, group of buildings, or campus used primarily or exclusively by a single for-profit corporation for office purposes. |
| Concession or food service contract restaurants | Restaurants that are part of a concession or food service contract covering such a building, group of buildings, or campus. |
| Qualifying stand-alone bakeries | Establishments that, as of September 15, 2023, operate a bakery producing bread for sale on premises as a stand-alone menu item, so long as they continue to. |
| Restaurants inside grocery stores | Restaurants operated by a grocery establishment inside that grocery establishment. |
If you land in one of these categories, the $20 rate does not apply and you revert to California's general minimum wage of $16.90, or a higher local rate if one applies. That is a difference of at least $3.10 per hour per employee, so it is worth confirming rather than assuming.
The Exempt Manager Trap
This is the section that matters most, and it is the one almost no article written for operators states plainly.
The mechanism is straightforward once you see it. California Labor Code section 515 requires that an employee exempt under the administrative, professional, or executive exemptions be paid a salary of at least twice the state minimum wage for full-time employment. AB 1228 then provides that the hourly minimum wage it establishes "shall constitute the state minimum wage for fast food restaurant employees for all purposes" under the Labor Code and the wage orders.
Put those two together. Twice $20.00, at 40 hours a week for 52 weeks, is $83,200. The DIR confirmed this in its FAQ, stating that if your salary is less than $83,200 as a fast food restaurant employee, you are not an exempt employee.
You have exactly two compliant options for a manager between $70,304 and $83,200: raise the salary to at least $83,200, or reclassify them as non-exempt and start tracking their hours and paying overtime. Doing neither is not a third option; it is a wage claim waiting to be filed. The exempt vs non-exempt guide covers the duties test, which you must also satisfy in addition to the salary threshold.
What Getting It Wrong Costs
California overtime exposure is larger than most operators expect, because California is not a weekly-overtime-only state.
| Overtime Trigger | Rate | Why It Compounds the Exposure |
|---|---|---|
| Over 8 hours in a workday | 1.5x regular rate | A manager working four 10-hour days owes 8 hours of daily overtime even though the week is only 40 hours. |
| Over 40 hours in a workweek | 1.5x regular rate | The familiar federal trigger. In California it is one of several, not the only one. |
| Over 12 hours in a workday | 2x regular rate | Double time. A 14-hour day during a busy period generates two hours at double the regular rate. |
| 7th consecutive workday | 1.5x for first 8 hours, 2x beyond | Common in restaurants during holidays and staffing crunches. |
A misclassified manager working 50 hours a week for a year does not just owe you a modest correction. Between weekly overtime, daily overtime on long shifts, and any double time, the back-wage figure adds up quickly, and it typically arrives alongside claims for missed meal and rest breaks, waiting time penalties, and interest.
Posting Requirements
Covered employers must post the Minimum Wage Order Supplement for Fast Food Restaurant Employees. This is a distinct posting from your standard Industrial Welfare Commission wage order, and it is available in English, Spanish, and Simplified Chinese. Wage Orders 5 and 7 were also updated as a result of AB 1228.
This is the cheapest item on the compliance list and one of the most commonly missed, because it is a new posting rather than a change to an existing one, so it does not turn up automatically when you replace last year's poster set.
How Local Minimum Wages Interact With the $20 Rate
The rule is asymmetric, and the asymmetry is the whole answer.
A city or county cannot pass an ordinance setting a higher minimum wage specifically for fast food restaurant employees covered by AB 1228. That path is closed.
But a city or county can set a higher general minimum wage applying to all employees in the jurisdiction, and covered fast food restaurants must then pay that higher local rate. The rule you follow is simply whichever is higher.
Practically: check the general minimum wage in every city where you have a location. Several California cities exceed $20 for 2026. If the local general minimum is $20.25, your covered employees get $20.25, not $20.00. The California compliance guide covers the broader state and local landscape.
What Happens Next to the Rate
The Fast Food Council has statutory authority to raise the rate annually. Any increase is capped at the lower of 3.5 percent or the increase in the consumer price index, and the Council may set a single statewide rate or vary it by region.
A cost-of-living increase of up to 70 cents, which would have taken the rate to $20.70, was under consideration. The follow-up vote did not occur and no increase was enacted, which is why the rate sits at $20.00 today.
Two things to do with that. First, do not assume the number is frozen; it is not, it is simply un-raised. Second, and more usefully, model the next increase now.
| If the Rate Becomes | Exempt Manager Threshold Becomes | Extra Annual Salary Per Exempt Manager |
|---|---|---|
| $20.00 (current) | $83,200 | Baseline |
| $20.70 (+3.5%) | $86,112 | +$2,912 |
| $21.00 | $87,360 | +$4,160 |
The hourly increase is the visible cost and the easy one to budget. The exempt threshold moving in lockstep is the one that surprises people, because every raise to the floor pushes your managers closer to being non-exempt without anyone touching their salary.
If You Are Not Covered
If you run an independent restaurant, or a chain under 60 locations, or a full-service restaurant with table service, AB 1228 does not apply to you. You pay California's general minimum wage of $16.90, or a higher local rate where one applies, and your exempt threshold is $70,304.
There is a common assumption that the $20 rate drags all restaurant wages up with it through competitive pressure. The research suggests the spillover onto uncovered businesses has been more limited than expected, with the largest wage increases concentrated at the covered firms rather than spreading evenly across the sector.
That said, you are competing for the same labor pool. If a covered chain across the street starts at $20 and you start at $16.90, you will feel it in hiring and in retention, even if no law obliges you to match. That is a business decision, not a compliance one, and the honest framing is that it belongs in your labor budget rather than your legal risk register. The restaurant labor cost guide covers how to model the whole picture.
Fast Food Minimum Wage Outside California
There is no federal fast-food-specific minimum wage. The federal minimum under the Fair Labor Standards Act is $7.25 per hour and applies across industries, and the Department of Labor publishes a fact sheet covering restaurants and fast food specifically.
California is the outlier, and it is the reason a search for "fast food minimum wage" returns California results even when you did not ask for them. New York previously operated a separate fast food wage schedule, which was overtaken as the state's general minimum wage rose past it. Every other state applies its general minimum wage to fast food workers.
If you operate across state lines, the practical implication is that California is the exception you build a separate process for, and everywhere else your restaurant follows the same wage rules as any other employer in that state. The federal minimum wage guide covers the baseline, and the compliance hub has the state-by-state picture.
The Compliance Checklist
The one that costs real money is the fourth item, and it is the one no poster reminds you about.
Common Mistakes
| Mistake | What Happens | The Fix |
|---|---|---|
| Using the general California exempt threshold for a covered manager | A manager paid between $70,304 and $83,200 is non-exempt and owed overtime, including daily overtime and double time. This is the most expensive error in this article. | Use $83,200 for every exempt employee at a covered restaurant. Raise them to it or reclassify them. |
| Assuming a franchisee is not covered | AB 1228 applies whether you own the brand or franchise it. The 60-location count is at the brand level nationally, not at your level. | Count the brand's US establishments, not yours. Two locations of a 300-unit chain is covered. |
| Counting only California locations | The threshold is 60 or more establishments nationally, not in California. A chain with 15 CA locations and 70 US locations is covered. | Count nationwide. This is a national chain test, not a California footprint test. |
| Not checking the AB 610 exemptions | You may be paying $20 when you are legally exempt and could be paying $16.90. That is at least $3.10 per hour per employee you did not have to spend. | Check the airport, hotel, event center, theme park, museum, gambling, corporate campus, bakery, and grocery store carve-outs. |
| Missing the supplemental posting | It is a separate posting from the standard wage order, so it does not appear automatically when you refresh your poster set. | Post the Minimum Wage Order Supplement for Fast Food Restaurant Employees, in English, Spanish, and Simplified Chinese. |
| Ignoring a higher local general minimum wage | A city cannot set a fast-food-specific rate above $20, but it can set a higher general minimum that applies to everyone. | Check the general local minimum in every city where you operate. Pay whichever is higher. |
| Assuming the rate is frozen at $20 | The Council can raise it annually, capped at the lower of 3.5% or CPI. Each increase also raises the exempt threshold. | Budget for the next increase. A move to $20.70 raises the exempt threshold to $86,112. |
Every one of these except the first is a coverage question. The first is a payroll question, and it is the one that turns into a lawsuit.
Where this breaks operationally at a multi-location operator is that the coverage determination, the manager's salary, the classification decision, and the posting record live in four different places, and when someone finally asks whether you did the analysis, nobody can produce it. FirstHR holds the employee records, the classification documentation, and the signed acknowledgments in one place with e-signature, so the answer to "can you show us how you classified this manager" takes thirty seconds rather than a week. It does not run your payroll. It keeps the paper that proves you did the work. The HR document management guide covers what else belongs there.
Frequently Asked Questions
What is the fast food minimum wage in California?
Covered fast food restaurant employees in California must be paid at least $20.00 per hour. The rate took effect on April 1, 2024, under AB 1228, and it has not changed since. The Fast Food Council considered a cost-of-living increase of up to 70 cents, which would have taken the rate to $20.70, but the follow-up vote did not occur and no increase was enacted. The rate applies from an employee's first day, with no probationary or training exception.
Who is covered by the California fast food minimum wage?
An establishment is covered only if all three conditions are met. First, it is part of a chain with 60 or more establishments nationally sharing a common brand or standardized offerings. Second, it is a limited-service restaurant where customers order and pay before eating, with limited or no table service. Third, it is primarily engaged in selling food and beverages for immediate consumption, meaning more than 50 percent of gross revenue. Franchisees are covered: it does not matter whether you own the brand or license it.
What is the exempt salary threshold for fast food managers in California?
A covered fast food manager must earn at least $83,200 per year, or $6,933.33 per month, to qualify as exempt. This is higher than California's general exempt threshold of $70,304 for 2026, and the difference catches many operators. Under California law, an exempt employee must earn at least twice the applicable minimum wage, and AB 1228 makes the $20.00 fast food rate the applicable state minimum wage for covered employees for all purposes. Twice $20.00 across 2,080 hours is $83,200.
Does the $20 fast food minimum wage apply to franchisees?
Yes. AB 1228 applies to employers of covered fast food restaurant employees regardless of whether the employer owns the national brand or is a franchisee or licensee of it. A franchisee operating two locations of a chain that has 60 or more establishments nationwide is covered, even though the franchisee personally owns only two. The 60-location count is measured at the brand level across the United States, not at the level of the individual owner.
Which restaurants are exempt from the California fast food minimum wage?
AB 610 added exemptions for restaurants located in airports, hotels, event centers, theme parks, museums, and gambling establishments. It also exempts restaurants in a building or campus used primarily by a single for-profit corporation for office purposes, and restaurants that are part of a concession or food service contract covering such a building or campus. AB 1228 itself already excluded certain establishments operating a bakery that produces bread sold as a stand-alone menu item, and restaurants operated inside grocery stores.
Can a city set a higher fast food minimum wage in California?
No, a city or county cannot pass an ordinance setting a higher minimum wage specifically for fast food restaurant employees covered by AB 1228. However, a local government can set a higher general minimum wage that applies to all employees in that jurisdiction, and covered fast food restaurants must then pay that higher local rate. So if a city's general minimum wage exceeds $20.00, you pay the local rate rather than the fast food rate.
Is $20 an hour the minimum for all fast food workers in the US?
No. There is no federal fast-food-specific minimum wage. The federal minimum wage under the Fair Labor Standards Act is $7.25 per hour and applies across industries. The $20.00 rate is specific to California and to covered chains under AB 1228. Other states apply their general minimum wage to fast food workers. New York previously ran a separate fast food wage schedule, which has since been overtaken by the state's general minimum wage increases.
What happens if I misclassify a fast food manager as exempt?
You owe unpaid overtime, and in California the exposure is larger than most operators expect because California requires daily overtime above 8 hours in a day and double time above 12 hours, on top of weekly overtime above 40 hours. A manager paid $75,000 clears the general California exempt threshold but falls below the $83,200 fast food threshold, which makes them non-exempt. Every hour of overtime they worked becomes a liability, along with potential penalties, interest, and meal and rest break claims.
Do I need to post anything for the fast food minimum wage?
Yes. Covered employers must post the Minimum Wage Order Supplement for Fast Food Restaurant Employees. This is a separate posting from your standard Industrial Welfare Commission wage order, and it is available in English, Spanish, and Simplified Chinese. Wage Orders 5 and 7 were also updated as a result of AB 1228. Posting requirements are the easiest part of this law to comply with and one of the easiest to forget.
Will the California fast food minimum wage go up?
It can. The Fast Food Council has authority to raise the rate annually, with any increase capped at the lower of 3.5 percent or the increase in the consumer price index. The Council can set a single statewide rate or vary the rate by region. A 3.5 percent increase would take the hourly rate to $20.70 and, more importantly for operators, raise the exempt manager threshold from $83,200 to roughly $86,112. Model that scenario in your budget before it happens.