In a televised meeting this afternoon, New York’s recently-convened Fast Food Wage Board confirmed industry employers’ fears and announced its unanimous recommendation that the wage for “fast food employees” in “fast food establishments” be increased to $15/hour by December 31, 2018 in New York City and by July 1, 2021 in the rest of New York State.  Prior to issuing their recommendations, the Wage Board elicited testimony from James Brown of the NY Department of Labor’s Division of Statistics regarding the cost of living in New York and the insufficiency of average wages in the industry.

The Wage Board announced a phase-in schedule for the increase, as follows:

For New York City:

  • $10.50/hour December 31, 2015;
  • $12.00/hour December 31, 2016;
  • $13.50/hour December 31, 2017;
  • $15.00/hour December 31, 2018;

For the balance of New York State:

  • $9.75/hour December 31, 2015;
  • $10.75/hour December 31, 2016;
  • $11.75/hour December 31, 2017;
  • $12.75/hour December 31, 2018;
  • $13.75/hour December 31, 2019;
  • $14.50/hour December 31, 2020;
  • $15.00/hour July 1, 2021.

In justifying the different phase-in schedules (anticipating potential legal challenges), the Board noted that the “fast food growth rate” is higher in New York City, allowing for greater “throughput” and profits. The Wage Board also provided recommended definitions for key terms relating to coverage under the new regulation: “Fast food employee”, “Fast food establishment”, “Chain”, “Franchisee”, “Franchisor”, “Franchise” (To be co-extensive with NY GBL § 681) and “Integrated enterprise.”  The recommended definition of “fast food establishment” includes franchise or chain establishments having 30 or more locations nationwide. The Board announced that their formal written recommendations would be subject to a 15-day public comment period.

New York’s Business Council has expressed concern regarding the Wage Board’s ability to properly and clearly define which employers and employees will be covered by this new rule.  Multiple industry groups, including the International Franchise Association, already have announced their intention to challenge the legality of the proposed rule through litigation, as the Association recently did in Seattle.