New York Singles Out “Fast Food” Industry for Minimum Wage of $15.00

The New York Fast Food Wage Board Issues Minimum Wage Recommendations 

On July 27, 2015, the New York Fast Food Wage Board (“FFWB”) formally approved resolutions to increase the minimum wage for workers in quick-service and fast-casual restaurants in New York City and the rest of New York to $15.00/hour by Dec. 31, 2018, and July 1, 2021, respectively. Although these wage increases are gradual and are subject to public comment before the recommendations become law, covered employers should be prepared to raise the minimum wage to $10.50/hour for New York City and $9.75/hour for the rest of New York by Dec. 31, 2015.      

Public Comment Period and Likely Effective Date

After the resolutions are signed and submitted to Acting Commissioner of Labor Mario Musolino, they will be filed and a notice of its filing will be made publicly available. After notice of filing is published, individuals and businesses will have 15 days to file public comments concerning the recommendations. It is highly likely that the FFWB’s resolutions will be adopted, irrespective of the contents of public comments. Accordingly, it is important that quick-service and fast-casual establishments evaluate their businesses and/or their relationships with their franchisors to determine whether they are obligated to comply with the new minimum wage by Dec. 31, 2015. 

The FFWB’s recommendations come on the heels of the announcement last week that Los Angeles County will be raising its minimum wage for all workers to $15/hour by 2020, as well as San Francisco’s and Seattle’s recent minimum wage increases. 

The FFWB’s recommended increases are as follows:

Who Are Covered Employees and Employers 

The FFWB proposed the following definitions to govern the scope of covered employees and employers:

A “Fast Food Employee” is “any person employed or permitted to work at or for a Fast Food Establishment by any employer where such person’s job duties include at least one of the following:  customer service, cooking, food or drink preparation, delivery, security, stocking supplies or equipment, cleaning, or routine maintenance.”

A “Fast Food Establishment” is “any establishment in the state of New York serving food or drink items:  (a) where patrons order or select items and pay before eating and such items may be consumed on the premises, taken out, or delivered to the customer’s location; (b) which offers limited service; (c) which is part of a chain; and (d) which is one of 30 or more establishments nationally, including: (i) an integrated enterprise which owns or operates 30 or more such establishments in the aggregate nationally; or (ii) an establishment operated pursuant to a Franchise where the Franchisor and Franchisee(s) of such Franchisor owns or operates 30 or more such establishments in the aggregate nationally.

Notably, the FFWB did not define “limited service.” Presumably, this term means that a restaurant provides no or limited table service, but since this is a required element of the definition of a Fast Food Establishment, this significant ambiguity will likely create problems for restaurants in deciding whether they are covered by the new minimum wage rules. Hopefully, as a result of the public comments on the recommendations, the FFWB or the Department of Labor will provide guidance on the meaning of this term before the first minimum wage increase becomes effective at the end of the year.

The FFWB provided further guidance for each of the following terms:

A “Chain” is “a set of establishments which share a common brand, or which are characterized by standardized options for décor, marketing, packaging, products, and services.”

An “Integrated Enterprise” is “two or more entities sufficiently integrated so as to be considered a single employer as determined by application of the following factors:  (i) degree of interrelation between the operations of multiple entities; (ii) degree to which the entities share common management; (iii) centralized control of labor relations; and (iv) degree of common ownership or financial control.”

A “Franchisee” is “a person or entity to whom a franchise is granted.”

A “Franchisor” is “a person or entity who grants a franchise to another person or entity.”

A “Franchise” is defined pursuant to General Business Law Section 681.