After months of negotiations, labor leadership and California’s quick-service restaurant industry hammered out a deal on restaurant worker legislation.
Labor agreed to pull back efforts related to a law that would make QSR brands liable for labor violations and removed funding for the Industrial Welfare Commission. Additionally, the deal, negotiated with assistance from Gov. Gavin Newsom’s office, altered the language in the Fast Food Accountability and Standards Recovery, or FAST Act.
Passed by the California Legislature and signed into law in 2022, the FAST Act would have set the minimum wage at $22 per hour with a 3.5 percent increase per year for employees at fast-food brands with more than 100 units.
Additionally, the law would have created a council with the authority to make decisions related to pay, benefits and working conditions. The legislation was met with major opposition from several organizations, including the International Franchise Association and the National Restaurant Association.
In response to the bill’s passage, opponents of the law in late 2022 filed a petition to put the legislation on the 2024 ballot and let the voters of the state decide on its future. The bill was later blocked in state court in early 2023.
Related: Not So FAST: California Court Blocks AB 257, Sets Up Potential Referendum Vote
In the ensuing months, with union support, some lawmakers introduced legislation AB 1228 to make QSR brands legally liable for labor violations committed by franchisees. Additionally, the Legislature bolstered another board, the Industrial Welfare Commission, in the state’s budget. That council also had authority to raise wages and enact worker conditions.
This month, the parties reached an agreement so the legislation will now include a minimum wage increase to $20 an hour for brands with more than 60 units nationwide. Additionally, wage increases of 3.5 percent or an amount based on consumer price index changes will be included.
IFA President and CEO Matt Haller
IFA President and CEO Matt Haller said the agreement was in the best interest of workers, local franchise restaurant owners and brands.
“It provides meaningful wage increases for workers, while at the same time eliminates more significant, and potentially existential, threats, costs and regulatory burdens targeting local restaurants in California,” Haller said.
A council will also still be established, but will feature a diversified group. A nine-person board, the council will include two QSR industry representatives, two franchisees or restaurant owners, two restaurant employees, two advocates for QSR employees and a member of the public not affiliated serving as chair.
“This agreement protects local restaurant owners from significant threats that would have made it difficult to continue to operate in California,” said Sean Kennedy, vice president of public affairs for the National Restaurant Association. “It provides a more predictable and stable future for restaurant workers and consumers.”