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Exemptions Go to the “Bread” Winners!

by Jennifer Shaw and Melissa Whitehead | | March 4, 2024

Many of you probably have heard about the FAST Act.  We can’t resist responding when employment law makes headlines, so below we dig into the FAST Act and its exemptions, and also explore the common link between legislative exemptions and well-funded lobbying groups.

The FAST Act

Assembly Bill 1228 repealed and replaced 2022’s FAST Act, and established a $20 per hour minimum wage for fast food workers, effective April 1, 2024. The bill also created a Fast Food Council to establish an hourly minimum wage for fast food restaurant employees, subsequently increase that minimum wage, and establish requirements, limitations, and procedures for adopting fast food restaurant health, safety, and employment standards.

A “fast food restaurant” is defined as a limited-service restaurant that is part of a national fast food chain. A “national fast food chain” means a set of limited-service restaurants consisting of more than 60 establishments nationally that share a common brand, or that are characterized by standardized options for decor, marketing, packaging, products, and services, and which are primarily engaged in providing food and beverages for immediate consumption on or off premises where patrons generally order or select items and pay before consuming, with limited or no table service.

FAST Act Exemptions

The law contains two exemptions. First, a restaurant located and operated within a “grocery establishment” is not considered a “fast food restaurant.” A “grocery establishment” means a retail store that is over 15,000 square feet in size and sells primarily household foodstuffs for offsite consumption. Also, a distribution center owned and operated by a grocery establishment and used primarily to distribute goods to or from its owned stores is a “grocery establishment,” regardless of its square footage. A grocery establishment does not include a retail store that has ceased operations for 12 months or more. (Cal. Labor Lab Code § 2502.)

A ”fast food restaurant” also does not include bakeries that produce and sell bread on site, so long as the bread is a stand-alone menu item. However, this exemption does not apply to purveyors of just any kind of bread. The bread must weigh one-half pound or more after cooling. (Yes, really.) This exemption only applies to establishments that have continuously operated such a bakery since September 15, 2023.

Exemptions and Legislative Compromises

Why include a “bread” exemption in the Fast Act?  Exemptions like this one are not uncommon.  Every piece of legislation is a compromise, of course. 

As a recent example, Assembly Bill 5 made it nearly impossible to classify workers as independent contractors in California – subject to a lengthy list of exemptions. Some of the exemptions seem to address real-world challenges, such as the business-to-business exemption. Others seemed to be the result of well-funded and successful lobbying groups – e.g., the exemption for lawyers and many insurance professionals.

Just as AB 5 continued to add legislative exemptions in the years following the bill’s enactment, we may see similar activity related to the FAST Act. For example, the recently introduced AB 610 seeks to exempt certain unionized sectors from the FAST Act. We’ll have to see what happens…

Stay tuned!

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