California’s fast food industry is bracing for a major shift as more than 1,200 Pizza Hut delivery drivers face layoffs this year. This development comes as the state’s minimum wage is set to rise from $16 to $20 an hour.
According to federal-employment notices reviewed by Business Insider, the layoffs will be effective throughout February, and will affect branches in Sacramento, Palm Springs, and Los Angeles.
Going forward, customers will get their Pizza Hut deliveries via third-party services like DoorDash, GrubHub, and Uber Eats.
Pizza Hut delivery driver layoffs
The WARN Act notice – a notice employers must provide 60 days before mass layoffs – states that Pizza Hut will “eliminate first-party delivery services and, as a result, the elimination of all delivery driver positions.”
A separate WARN Act notice issued on December 1 mentioned driver layoffs at a second Pizza Hut franchisee, Southern California Pizza Co. This layoff affects 841 delivery drivers in the Orange, Los Angeles, Riverside, Ventura, and San Bernardino counties.
A driver who wishes to remain anonymous told Business Insider he was given $400 severance pay, on condition he remain in Pizza Hut’s employ until his February 5 layoff date.
Minimum wage legislation
The minimum wage legislation was signed in September 2023. It authorizes the Fast Food Council to set fast-food restaurant standards for minimum wage, and develop proposals for other working conditions, including health and safety standards and training.
Governor Gavin Newsom says workers will have “a stronger say in setting minimum wages and working conditions, including health and safety standards.”
“California is home to more than 500,000 fast-food workers who – for decades – have been fighting for higher wages and better working conditions. [We] take one step closer to fairer wages, safer and healthier working conditions, and better training by giving hardworking fast-food workers a stronger voice and seat at the table.”
Ripple effects on fast food industry
The legislation will likely raise menu prices at fast food establishments. Chipotle’s Chief Financial Officer Jack Hartung said in October that prices will increase by a “mid-to-high single-digit” percentage.
Fast food retailers will also have to adjust salary thresholds to account for the new minimum wage legislation.
According to law firm Nixon Peabody LLP: “California has an aggressive (if not draconian) penalty scheme that punishes the non-payment of wages in multiple ways, often leading to penalties [5 to 500 times] the actual unpaid minimum wages.”
Currently, minimum wages in the state range from $16.52 in the Alameda district to $19.08 per hour in West Hollywood.
About the author
Cheryl has contributed to various international publications, with a fervor for data and technology. She explores the intersection of emerging tech trends with logistics, focusing on how digital innovations are reshaping industries on a global scale. When she's not dissecting the latest developments in AI-driven innovation and digital solutions, Cheryl can be found gaming, kickboxing, or navigating the novel niches of consumer gadgetry.
