The polarizing law, which has been praised by advocates for low-income workers and blasted by the restaurant industry, is expected to lead to menu price increases at many popular chains, including McDonald’s and Chipotle.

The quick-service restaurant industry employs at least 500,000 Californians, but how many of them qualify for the raise?

The California Department of Industrial Relations has published a Frequently Asked Questions website about AB 1228 with the hope of clearing up any confusion.

Among the more pressing questions are: what is considered a “fast food restaurant,” and which employees are covered by the new law?

According to the state’s website, it must be a “limited-service restaurant … that offers limited or no table service, where customers order food or beverage items and pay for them before they are consumed.”

Also, the food must be intended for “immediate consumption.”

But even if a restaurant meets those criteria, there is yet another layer.

A smaller, locally owned and operated burger joint or taco shop per se will not be impacted by the new law if it is not part of a chain of at least 60 restaurants nationwide.  

“Business locations performing only administrative, warehouse, or food preparation work are not counted as “establishments” toward the 60-establishment minimum,” the state explains.

What if a restaurant serves food for “immediate consumption” but also offers prepared dishes to be heated and served later?

This is where things get a bit murky.

If a restaurant earns more than 50% of its gross income from selling food or beverage items for “immediate consumption,” then its employees should be paid $20 an hour starting Monday.

“For example, if a fast food pizza restaurant earns 30% of its revenue from ‘take and bake’ pizza to be baked at home, but earns 70% of its revenue from sales of fully-cooked food and beverages for immediate consumption, the restaurant is primarily engaged in selling food and beverage for immediate consumption and would be covered by the new law (provided no other exemption applies),” according to the FAQs

What about ice cream, boba tea, pretzel and donut shops?

If they are part of a chain of at least 60 restaurants, yes, they are considered to be “fast food” and must adhere to AB 1228.

One of the more controversial elements of the new law is the exemption for restaurants that also operate as a bakery that “produces” and sells “bread” as a stand-alone menu item.

Why is “bread” in quotation marks? Because that also needed to be defined.

The FAQ website explains, “Bread is defined as a single unit item that weighs at least ½ pound after cooling and must be sold as a stand-alone item.”

Hamburger buns, croissants, muffins, scones and rolls don’t count because they aren’t heavy enough.

Also, restaurants aren’t exempt if they don’t produce bread on-site, which also needed to be defined because some restaurants bake pre-made dough (those aren’t exempt).

Initially, it appeared that Panera Bread would be exempt, which led to an unflattering article from Bloomberg which reported that it was a carve-out for a wealthy Gov. Gavin Newsom donor, Greg Flynn, who owns two dozen Panera Bread locations in California.

Both Newsom and Flynn denied the assertion and Flynn later announced that he would abide by the new law.

What if a grocery store serves fast food at a separate counter or kiosk?

AB 1228 might not apply.

There’s an exemption for fast food establishments located within a store “over 15,000 square feet in size” that sells primarily “household foodstuffs,” including fresh produce, meat, poultry, fish, deli products, dairy products, canned foods, dry foods, beverages, baked foods, or prepared foods to be consumed offsite.

The new law includes many other provisions, including whether fast food managers are exempt, whether workers who receive tips are exempt (they’re not), and why there could be differences between two employees who work for the same chain. Read all FAQs about California’s new fast food minimum wage law here.

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A Certificate of Appreciate was given to Vincent Overmeyer for his lengthy service to the Planning Commission, as well as a Proclamation for Veterans Business Day. On the agenda was the appointment of Cyndi Lemke of Hemet Chamber of Commerce, named to replace retiring Overmeyer. Once again, there was a video presentation of the city’s “milestones” (in other words, some items that should have been accomplished a couple of years ago, not just the past year); for example, city paving, Citrus Pointe Housing Development, Hemet Fire Response, Hemet Police Department, and Vote-by-mail ballot collection.

SEIU Local 721 employees demonstrated in front of City Hall with union representative and organizer Tk Delgadillo. Scheduled to speak were Alan Alejo, Donald Kay, Paul Martinez, Eric Pelkey, Tommy Rodriguez, Karen Johnson, Emma Johnson (community member), Brett Long, Matt Taylor, Gregory Meeh, Steve Feldman, Yajara Howard, & Andrea Jacomet.

Speakers raised their voices in a peaceful demonstration while a dozen or so stepped up to the podium to express their concern and frustration about the fact that the city has not operated in good faith in terms of giving them a fair contract.

Particularly effective was Yajara Howard, Accounting Tech III. She described how the city has not kept given pay raises in fourteen years.

She talked about her special needs child and asked that the city “invest in their employees as they invest in the city.”

You could hear a pin drop when 16-year old Emma Johnson spoke on behalf of her single mother, who works for the city of Hemet. She spoke of the fact that she has worked without a contract for 2 years. She echoed the same concerns and aggravation spoken of by all the employees. There was no rancor in her pleas, just simple frustration with a reminder to the council that they can easily find work elsewhere if being a public servant doesn’t suit them.

There were repeated stories of inadequate employees to complete mandated tasks. Steven Feldman, a 4-year city employee, explained that he uses his own tools to accomplish his job when the city should be providing tools.

Library employees Andrea Jaconet and Eric Pelkey expressed dismay and frustration at a lack of a fair contract. Pelkey mentioned that retirement would not offer the financial security that might otherwise have been experienced if the city had provided fair pay raises.

In closing, Brett Long, a 4th generation Hemet citizen who has worked eight years in the city’s building department, stated that the department is falling apart due to a lack of employees. He talked about seven new housing developments coming to Hemet and new businesses coming in.

Permits are not being handled in a timely manner. Phone calls and emails from Hemet citizens are going unanswered due to a lack of adequate staffing. Why does the city continue to solicit more development if they lack the employees to issue permits and complete the process?

Accompanying the union comments were those made by the public. Treasurer-elect Sue Savage gave an impassioned speech declaring her vow to be transparent and communicative with residents. She asked for an audit of the Investment Portfolio for the last three years. She presented a chart detailing all the missed reports to the council, reminding the council that an audit has been on their agenda for at least a year. Sue stated, “As the elected, but not yet certified, Treasurer, it is tantamount this audit takes place before I am installed. The audit would ensure the portfolio is correctly and accurately represented to me, the incoming Treasurer. It is necessary for the audit to be a forensic, transactional audit covering the last three years”. She went on to say, “I promised the citizens of Hemet they would get transparency. Therefore, when I take over as Hemet City Treasurer, the Investment Report will get an upgrade.”

This table shows filed Investment Reports for the following City Council meetings:

Regular council attendee Pat Gregory describes how the city continues to rely on Measure U funds as a means for balancing the budget.

Councilmember Krupa expressed her joy at being able to access grant money that will benefit the community. This is part of the CARES act (due to COVID 19). Also benefiting is the Salvation Army. Mayor Brown echoed Krupa’s comments. Krupa described this as a “feel good” transaction.

Once again, the delayed Investment Portfolio of September 2020 was received and filed, with no comment, as was the Warrant Register (that was on time).

There were numerous grants to be approved by the council, ranging from housing to law enforcement and traffic control. The only strings appear to be that the city reports and complies with the terms of the grants.

Incredibly, the council approved an expenditure of about a million dollars for a replacement firewall system. Now you get a sense of some of the things that go into running the city government. It’s a big business.

Krupa expressed irritation with the state’s unfunded mandates regarding the building of homes in Hemet (and other communities). Council voted to adopt the resolution, basically kicked the can down the road. Essentially, the council zoned for housing; they have no intention of building, just to comply with state demands. In ten years, two city council elections later, someone will decide that it would be a great idea to build a high-density residential building in the middle of a well-developed and stable single-family home neighborhood. No one will remember why the zoning was adopted. “Oh, we’ll never build this; we’re just zoning for it,” said Krupa. This is what we mean by “institutional knowledge’. This is the reasoning that the council uses to retain a $2,000,000 attorney (when they have an option of hiring a Hemet city employee at likely far less”. This is the rationale for retaining the services of Eric Vail, current city attorney. The trick is to retain high-level managers instead of watching them come and go through the revolving door of city government.

Lastly, Finance Director Lorena Rocha walked the council through a review of Fiscal Year End 2019-2020 Review and Quarterly Budget Update. She talked about the impact of COVID 19 on city revenue, sales tax and other income.

There was a considerable amount of time devoted to clarifying what the finance department can and can’t do without the approval of the City Council. One thing that creates confusion is the city’s accounting basis.

As Ms. Rocha explained, the city uses a modified accrual system as opposed to cash basis. Sometimes, something will be budgeted, but perhaps the project will not be completed in the allotted time and left-over unused amounts get ‘rolled over” to the following year. It creates a big mess for someone who is new to city finances and how they work.

Website Investopedia.com describes the difference between accrual and cash accounting as the timing of when revenue and expenses are recognized. The cash method is a more immediate recognition of revenue and expenses, while the accrual method focuses on anticipated revenue and expenses. Most municipalities use the accrual method of accounting. Meyer reminded Rocha that the Finance Department doesn’t have the right to change any budgetary issues. The council must approve all budgetary items as it’s a transparency issue. There was a discussion about Measure U expenditures, which was affected by COVID, along with all the other items in the budget. What we would like to know is why are there no more personnel being added to the police and fire department? Where is that money going? Oh, right, it’s in the general fund. If Hemet had a real public safety problem, there would not be enough employees to control things.

Meyer called out City Manager Lopez for not using funds designated by city council for specific uses. A public works employee stated that Lopez cut the Public Works budget by 50% for this upcoming year in the interest of creating a surplus. That’s what we call fuzzy accounting. Now you understand why employees aren’t getting raises. That’s why projects approved years ago don’t get completed in a timely manner. The City Manager does not control expenditures, council does. If you’re going to get upset about how money is being budgeted and used, don’t blame council members exclusively; blame upper-level managers who play fast and are loose with the budgeting. It is most likely a combination of too many things to do and not enough time to do them, poor execution and delegation to subordinates. That’s OK; our city manager has a five-year contract, he’ll learn who’s in charge.

A protracted discussion took place on options for managing the CalPERS Long Term Liability and how it can be funded. That will come up for further discussion in the near future, at which time there will be more specifics.

In closing, there was an update on Novel Corona Virus (COVID-19) Emergency Declaration. We are not in the purple zone and await a reduction of COVID-19 cases. Even with this reduced tier, many churches are meeting inside and several restaurants continue to offer indoor dining (with limitations).

Ann Smith • Contribuor

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