California businesses exempt from $20 minimum wage hike

LOS ANGELES - April 1 marked a milestone for many fast food workers in California as the state's new minimum wage law went into effect. 

AB-1228, passed last September, bumped up the minimum wage to $20 an hour for restaurant workers in certain establishments.

According to the legislation, chain restaurants with "limited or no table service" and more than 60 franchises across the U.S. must adhere to the new law. Those establishments include places that sell food and drinks that are selected and paid for beforehand, and are meant to be immediately consumed on or offsite. It also applies to other eateries like some coffee shops or ice cream parlors.

Who is exempt from this minimum wage hike? 

The criteria become a little muddled when it comes to said exemptions. 

Small chains like mom-and-pop restaurants and some fine dining, high-end restaurants are exempt.

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Also exempt are restaurants located inside "large grocery establishments" - like a McDonald's inside a Safeway for example. But, the grocery store must also employ the workers within the restaurant (the employees can't be hired by the restaurant or franchisee). 

But if you’re employed at a fast food restaurant within another kind of store that isn't a grocery store, the state says you are eligible for the fast food raise - but only for the hours you work inside the fast food restaurant itself.

Also exempt are restaurants with more than 60 nationwide locations that serve food for "immediate consumption" if they are operating within another business, like airports, hotels, large event centers, theme parks, and museums. 

According to the legislation, these places "generally do not share the same characteristics as traditional fast food restaurants that are part of national fast food chains" on account of their factors including their "distinct economics and a captive customer base."

The confusion doesn't end there. 

Restaurants that sell bread as a "stand-alone menu item" are exempt from the new wage law as long as that bread was made inside the restaurant and that bread item weighs at least half a pound after it cools.

Keep in mind though that to qualify for this bread exemption, the restaurant had to have been making and selling bread as a stand-alone item by Sept. 15 of last year. 

Restaurants that sell bread weighing more than half a pound, but  use pre-made dough or dough that was made somewhere other than the restaurant, also do not qualify for an exemption.

At first, it appeared the bread exemption applied to Panera Bread restaurants. Bloomberg News reported the change would benefit Greg Flynn, a wealthy campaign donor to Newsom. But the Newsom administration said the wage increase law does apply to Panera Bread because the restaurant does not make dough on-site. Also, Flynn has announced he would pay his workers at least $20 per hour.

The Associated Press contributed to this report.