New York Serves Up a Wage Increase to Fast Food Workers

On September 10, 2015, New York State Acting Commissioner of Labor Mario J. Musolino issued an Order adopting and accepting the Report and Recommendations of the 2015 Fast Food Wage Board regarding increasing the minimum wage in the fast-food industry.  Pursuant to the Order, the minimum wage for “Fast Food Employees” will increase to $15.00 by December 31, 2018, in New York City and by December 31, 2021, across the rest of New York State.  The minimum wage increases will be phased in incrementally over the next several years, commencing on December 31, 2015.  Thus, as of December 31, 2015, Fast Food Employees in New York City shall be entitled to a minimum wage of $10.50 per hour and Fast-Food Employees throughout the rest of New York State shall be entitled to a minimum wage of $9.75 per hour.

The minimum wage increase only applies to “Fast Food Employees” working at “Fast Food Establishments.”  The Order defines “Fast Food Employees” as “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.”  The definition of “Fast Food Employees” encompasses contracted workers to prevent employers from attempting to circumvent paying the minimum wage by subcontracting work.

The critical issue for the restaurant industry is what constitutes a Fast-Food Establishment under the Order such that compliance with the Order is mandated.  A “Fast Food Establishment” is defined as “any establishment in the state of New York: (a) which has as its primary purpose serving food or drink items; (b) 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; (c) which offers limited service; (d) which is part of a chain; and (e) which is one of thirty (30) or more establishments nationally, including (i) an integrated enterprise which owns or operates thirty (30) or more such establishments in the aggregate nationally; or (ii) an establishment operating pursuant to a Franchise where the Franchisor and the Franchisee(s) of such Franchisor own or operate thirty (30) or more establishments in the aggregate nationally.”  The definition of “Fast Food Establishment” includes such establishments even if they are located within other establishments.

All restaurateurs should carefully evaluate whether they fall within the Order’s definition of “Fast Food Establishment,” and, if they do, they need to ensure that they are prepared to implement the steady wage increases that commence on December 31, 2015.  Moreover, while there is yet to be an announcement as to whether the Department of Labor will be issuing regulations related to the wage increase, these regulations are likely forthcoming and will be critical for employers to be aware of as they should provide clarity regarding who is covered by the increase, guidance on how to navigate the increase and may provide for exclusions.

The fast-food industry, however, may not be the only industry impacted by increased minimum wages.  On September 10, 2015, Governor Cuomo announced that he intends to introduce legislation increasing New York’s minimum wage for all workers throughout the State of New York to $15 per hour.

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