On September 11, 2023, industry, government, and union representatives announced that they had reached a deal to remove a California referendum on the Fast Food Accountability and Standards (“FAST”) Recovery Act from the 2024 ballot. The Fast Act has a storied history, commencing with legislation which was scheduled to take effect on January 1, 2023, which prompted a responsive referendum and legal action.    

The compromise bill, Assembly Bill (“AB”) 1228 will increase the minimum wage for fast food workers in the state to $20 an hour in April 2024 if the fast food chain has more than 60 locations across the country.  Approximately 500,000 workers will be affected by the wage increase.

AB 1228 removed the FAST Act’s provisions on joint employer liability, which would have imposed employer liability on both franchisors and franchisees.  However, a cornerstone of the Fast Act, the establishment of an unelected Fast Food Council, remains.   

Specifically, a new nine-member Fast Food Council (the “Council”) will be established. The Council will have two business representatives from the fast food industry, two franchisees or restaurant owners, two restaurant employees, two union advocates for fast food employees, and a chair person who is unaffiliated with either side. The Council’s first meeting will be held on March 15, 2024. The Council will be responsible for establishing minimum standards on wages, working hours, and working conditions. The Council is prohibited from enacting rules regarding predictive scheduling and from creating new paid time off or leave benefits.

The Council will have the power to further increase the minimum wage beginning on January 1, 2025. Any minimum wage increase is capped at the lesser of 3.5% or the annual rate of inflation reflected in the Consumer Price Index.

Lawmakers have until Thursday, September 14, 2023, to pass the compromise bill. To facilitate the withdraw of the referendum, on September 8, 2023, Governor Newsom signed AB 421 as an urgency measure., to create a process for proponents of a referendum to withdraw the referendum from the ballot if they do so more than 131 days before the election.

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