More than 1,000 Pizza Hut delivery workers will lose their jobs in California after the state implemented a new $20 minimum wage for fast food workers.
Two Pizza Hut franchise owners with hundreds of stores in the Golden State will eliminate all of their delivery drivers in the new year and instead rely solely on third-party apps like DoorDash and UberEats.
The measure appears to be prompted by California Governor Gavin Newsom's new law, which will require all fast-food chains with 60 or more locations across the country to pay $20 per hour starting in April.
It has sparked controversy among chains, with McDonald's and Chipotle both warning they will have to increase menu prices in the state.
More than 1,000 Pizza Hut delivery workers will lose their jobs in California after the state implements a new $20 minimum wage for fast food workers
The measure appears to be inspired by California Governor Gavin Newsom's new law, which requires all fast-food chains with 60 or more locations across the country to pay employees $20 per hour from April. Chipotle said it will have to raise menu prices to offset rising labor costs in California
The layoffs will take effect in February and will affect Pizza Hut drivers in Sacramento, Palm Springs and Los Angeles, among others.
In a federal Worker Adjustment and Retraining (WARN) notice seen by DailyMail.comthe owners said: 'PacPizza, LLC, operating as Pizza Hut, has made a business decision to eliminate frontline delivery services and, as a result, the elimination of all delivery driver positions.'
The WARN Act requires all employers to provide notice of plant closings or mass layoffs.
A second franchisee, Southern California Pizza Co., is also ending its in-house delivery services, according to a WARN notice, effective Dec. 1. A total of 1,200 drivers will be affected.
An anonymous Pizza Hut driver — who worked for the chain for nine years — was offered just $400 in severance if he stayed until his Feb. 5 layoff date.
'The money they are giving us as severance pay is a slap in the face. It amounts to three dollars a month for more than nine years of employment,” he said Business insider
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A Pizza Hut spokesperson said it was “aware” of changes to delivery services at certain restaurants in California.
He 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 our customers with quality service and food through takeout and delivery.”
It comes after a long battle between Governor Newsom and fast food chains in California over raising the minimum wage.
In 2022, Newsom signed the FAST Act into law, which called for a minimum wage of $22 per hour for fast food workers starting in 2023.
However, a coalition of restaurant industry organizations pushed back, warning it could increase costs for restaurants by $3 billion.
This year, a new law – AB1228 – replaced the FAST Act and lowered the wage to $20. It will affect 557,000 fast food workers and 30,000 restaurants in California.
Newsom's signature reflects the power and influence of unions in the nation's most populous state, which have worked to organize fast-food workers in an effort to improve their wages and working conditions.
But earlier this year, McDonald's and Chipotle both indicated that customers would ultimately pay for the higher labor costs through higher menu prices. Neither has indicated exactly how much costs would increase.
“Certainly, there will be an element of it that needs to be resolved with higher prices,” McDonald's CEO Christ Kempczinski said in an earnings call.
It comes after a long battle between Governor Newsom (pictured) and fast food chains in California over raising the minimum wage
“There's certainly going to be an element of it that needs to be addressed with higher prices,” McDonald's CEO Chris Kempczinski said in an earnings call.
Meanwhile, Chipotle Chief Financial Officer Jack Hartung told analysts that the chain will likely increase prices by a “mid to high single digit” percentage as a result of the law change.
Across the board, twenty-two states will increase their minimum wages by early 2024.
Nine states and DC will have a minimum wage of at least $15 by January 1, according to an analysis by DailyMail.com.