California’s New “Woke” Laws Are Costing People Their Jobs

By: Ben Campbell | Published: Jan 12, 2024

Over 1,000 workers in California are set to lose their jobs as one of the nation’s largest pizza companies feels the effects of new “woke” laws.

Recently, the federal government of the Golden State announced it would be raising the minimum wage to $20. Unfortunately, this has forced Pizza Hut to lay off the majority of its delivery drivers in the state.

California Hikes Minimum Wage

A few months ago, California governor Gavin Newsom signed AB 1228, which set a new minimum wage of $20 per hour for those working in the fast food industry.

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California Governor Gavin Newsom giving the thumbs up during a speech

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According to reports, the new minimum wage will be in full effect across the state by April 1, 2024. But the law won’t have a positive effect on everyone in the fast food sector.

Details of the New Law

According to the San Francisco Chronicle, the recently enacted AB1228 law mandates that around 557,000 fast-food employees across 30,000 Californian restaurants will experience a wage increase to $20 starting April.

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Inside a fast-food restaurant kitchen, two workers in uniform are seen preparing orders. The kitchen is equipped with modern appliances and digital order screens

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Additionally, it allows for potential annual wage hikes of up to 3.5% until 2029.

Establishment of a Fast Food Council

Yahoo Finance reports that in addition to the minimum wage increase, another vital part of the legislation is the creation of the nine-person fast food council, composed of two fast food industry representatives, two franchisee or restaurant owner representatives, two employee representatives, two employee advocacy group representatives, and one public member.

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A variety of fast food dishes are displayed on a wooden counter under warm lighting. In the foreground, there's a bowl of nachos, a sandwich with fries, and a burrito with sides

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From 2025 to 2029, this council has exclusive authority to annually adjust fast food workers’ minimum wage, by either  3.5% or the annual change in consumer price index, whichever is lower. This provision expires in 2029.

Setting a New Standard for Industry Focused Laws

The California Employment Law Report, published by Zaller Law Group, predicts that the AB 1228 law has set a legislative trend towards industry-specific laws. 

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Overhead view of a table during a meal, with two people eating. The table features two plates of fries, glasses of water, condiments, and a beer pitcher. One person is holding a burger, while the other is eating a plate of grilled vegetables

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Explaining this prediction, Anthony Zaller states “because the law does not apply to every employer across the state, the opposition to such legislation is much less.  And, of course, once the law is passed and has gained traction in one industry, it is easier for the legislature to expand the law to other industries.”

Pizza Hut Forced to Lay Off Employees

KABC-TV was the first to report that Pizza Hut restaurants across California will begin to lay off their delivery drivers before the law comes into action.

White and red building adorned with a large Pizza Hut symbol

Source: @FoxNewsInsider/X

“PacPizza, LLC, operating as Pizza Hut, has made a business decision to eliminate first-party delivery services and, as a result, the elimination of all delivery driver positions,” the company wrote in a filed notice.

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Layoff to Affect Major California Towns and Cities

The removal of delivery drivers will leave 1,200 workers at Pizza Hut without employment. The areas hardest hit include the Los Angeles, Orange, San Bernardino, and Riverside counties, according to KABC.

Pizza Hut employee smiles for a photo with a customer who recently gave him a $100 tip

Source: @JimSichko/X

The two Pizza Hut franchisees behind the layoffs are PacPizza, LLC, and Southern California Pizza Co., Business Insider reports.

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A Driver Speaks Out

A driver, preferring to stay anonymous, informed Business Insider that he was promised a $400 severance if he remained until his layoff on February 5. 

A close-up image showing a freshly baked pepperoni pizza with melted cheese and a golden crust, presented in a pizza box

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With nine years of driving experience, he expressed dissatisfaction with the severance offer, saying “The money they are giving us as severance pay is a slap on the face,” he continued “It comes to $3 a month for nine-plus years of service.” 

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One’s Loss Is Another's Gain

Those who desire a food delivery from Pizza Hut in the future will now be required to order through a third-party delivery app such as DoorDash or Uber Eats.

Uber Eats driver waits at a checkout window for his next delivery

Source: @PhutaLiyenzeka/X

Due to the rise in minimum wage, Pizza Hut argues it can no longer afford its own delivery drivers.

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Further Food Industry Changes

CBS News has reported that on the opposite coast, DoorDash announced modifications for New York City: the removal of tipping prompts and an increased service fee on all transactions. 

A close-up of a smartphone lying on a wooden surface, displaying the launch screen of the DoorDash app with its logo in red and white

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However, customers can still add gratuity after the delivery is completed, the delivery app confirmed. These changes reflect a nationwide shift in the wage practices of the fast-food word.

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Minimum Wage In New York City

According to CBS, these tipping changes come as a reaction to the minimum wage being increased for app-based food delivery workers in New York City.

A food delivery cyclist, clad in a red jacket and helmet, waits at a city street intersection. The cyclist has a large red insulated delivery backpack mounted on the bike. Urban buildings, pedestrians, and vehicles can be seen in the background, along with a shopfront

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The New York Times reports that as of July 2023, New York City set a precedent as the first U.S. city to mandate a minimum wage for app-based food delivery workers, nearly $18 per hour. By July 12, delivery apps were required to pay at least $17.96 per hour plus tips, increasing to $19.96 by 2025 and subsequently adjusting for inflation. 

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Customers Disappointed With Pizza Hut's Decision

KTVU spoke with numerous long-term customers of the popular pizza franchise. Many claim they’re unhappy with Pizza Hut’s decision to cut the drivers. Hao Ngo of San Jose said, “I think it was a horrible decision.”

Pizza customer sits down to enjoy his favorite pizza as he works

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He continued, “We should definitely put money in the community so everybody can survive. Everybody out here is having a hard time right now, and firing people isn’t the solution.”

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Layoffs Caused by Tech

The Washington Examiner explained that to get around rising labor costs, many franchises are adopting technologies to replace cashiers with computer kiosks. 

Inside a McDonald's restaurant, two customers are seen interacting with self-service ordering kiosks. In the background, there are people eating at tables and a McDonald's employee in the foreground walking by

Source: Wikimedia Commons

This shift will lead to higher wages for employees who retain their jobs, but it will also contribute to a greater overall job loss.

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Thousands of More Jobs at Risk

With the signing of the new minimum wage bill by Gavin Newsom, it’s likely that over 30,000 fast-food restaurants across the Golden State will be forced to cut employees.

Man carries a box with all of his belongings after being let go by his employer

Source: Freepik

Southern California Pizza Co., the other large franchise in the region, also announced they would be forced to cut over 800 employees from the payroll.

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Companies Forced to Raise Prices

Other fast-food restaurants in California have been forced to devise a plan to cope with the drastic increase in employee wages.

A McDonald's menu is shown on screen at a popular location in Houston, Texas

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Chipotle and McDonald’s have both announced they’ll be raising the prices of various items on their menus to cope with the new regulations.

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McDonald’s Price Hike

Fox Business revealed that in an earnings call, McDonald’s CEO Chris Kempczinski, stated he believed that prices were going to increase as a direct result of the minimum wage hike. 

Nighttime view of a McDonald's restaurant facade with glowing golden arches and illuminated signage against a starry sky

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Speaking in the call, he said “Certainly, there’s going to be some element of that that does need to be worked through with higher pricing,” 

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The Soaring Cost of a Big Mac

Not only are prices increasing due to the minimum wage hike, but inflation is also playing a part. 

Close-up view of a Big Mac with sesame seed bun, lettuce, cheese, and beef patties on a McDonald's branded wrapper

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McDonald’s revealed that “strategic menu price increases” have contributed to a 14% increase in revenue but have also already raised prices nationwide due to rampant inflation. This includes an $18 Big Mac meal in Connecticut, as per the New York Post.

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Chipotle Price Rises

The Daily Mail has reported that during a company earnings call, Chipotle’s CFO, Jack Hartung, informed analysts of a probable price hike at the chain. 

Exterior view of a Chipotle restaurant, with its signage above the entrance. The building has a brick facade and large glass windows reflecting the street

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He anticipates an increase in the “mid-to-high single-digit” percentage range, citing the change in law as the primary reason for this adjustment.

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Customers Will Suffer the Most

During his interview with KTVU, Hao Ngo also spoke about the impact the increase in minimum wage will have on customers.

Woman enjoys a slice of freshly baked pizza from her favorite restaurant

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“As for the people, if they’re going to raise the price, I’m still going to have to get it. So, we’re actually really suffering on the back end,” he said.

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Consumers Priced Out of Restaurants

The New York Post explains that customers have cut down on the amount they are spending on fast food, as a result of the rising costs. 

A McDonald's fast food meal laid out on a tray, featuring a large portion of fries, a wrapped burger, ketchup, and a soda cup with a Coca-Cola logo, on a light-colored table

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They report that McDonald’s executives revealed that a fewer number of Americans earning $45,000 or less visited McDonald’s branches in the last quarter of 2023.

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Ramifications for the Industry

The fast-food sector will no doubt be gearing up for the ramifications of the change in wages. It will undoubtedly affect aspects of business, from in-house operations to customer service and, of course, workforce numbers.

A collection of unused Pizza Hut delivery scooters lined up on a path outside the restaurant

Source: Frederic Pitchal/Sygma/Getty Images

Yet major players in the industry, including Taco Bell and KFC, have both refrained from commenting on the announcement of Newsom’s new legislation.

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Pizza Hut Representative Speaks Out

A Yum Brands representative, speaking for Pizza Hut’s parent company, sat down with Business Insider to discuss how the change in minimum wage will affect the franchise across the state.

A traditional Pizza Hut restaurant with a red roof and large signboard alongside a road during the daytime

Source: Wikimedia Commons

He began by claiming they are “aware of the recent changes to delivery services at certain franchise restaurants in California.”

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Gavin Newsom’s View

Time disclosed that the governor of California, Gavin Newsom, was quoted as saying “This is a big deal,” at an event in Los Angeles, where he signed the AB 1228 bill. 

Gavin Newsom speaking at a podium with a microphone, gesturing with his right hand. The background features a step-and-repeat banner with the logos of ROYBAL and LAUSD

Source: Getty Images

Speaking at the event, Newsom also challenged the notion that fast-food jobs are merely for teenagers starting their careers, describing it as a “romanticized version of a world that doesn’t exist,” he continued, saying “We have the opportunity to reward that contribution, reward that sacrifice and stabilize an industry.”

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Quality Service and Food Will Continue

The representative explained the company has no doubts they’ll continue to supply customers with quality food and service even if the deliveries are taken over by third-party apps.

A woman receives a fresh pizza from her local restaurant

Source: Freepik

The rep said, “Our franchisees independently own and operate their restaurants in accordance with local market dynamics and comply with all federal, state, and local regulations while continuing to provide quality service and food to our customers via carryout and delivery.”

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