Fast-food companies that spent millions of dollars to defeat a worker-protections law agreed over the weekend to pull their referendum from the November 2024 ballot in a move that will give employees a $20-an-hour minimum wage.
The California Legislature has until Thursday to approve the agreement, which would avoid a costly battle with labor unions.
The pay hike, considered modest, would take effect in April. The average hourly wage for California’s 557,000 fast-food workers in December was about $19, according to UC Berkeley economist Michael Reich.
The move, cheered by fast-food cooks, cashiers and baristas, will result in a new set of amendments to Assembly Bill 1228 and pave the way for the creation of a fast-food council, first approved last year in Assembly Bill 257, also known as the FAST Recovery Act.
The council would establish minimum standards on wages and make recommendations on working hours to ensure the health, safety and welfare of workers are developed with proper oversight. It also would have the power to raise the fast food minimum wage to as much as $22 an hour.
The panel would be comprised of nine voting members, including representatives from the fast food industry, franchisees, employees, advocates, one unaffiliated member and two non-voting members.
If approved by the Legislature, the council will meet for the first time by March 15, earlier than it would have if it had to await voter approval in November 2024.
The amendments to AB 1228 also eliminate a controversial proposal that would have held fast-food corporations legally responsible for harassment, wage theft or labor violations that occur at franchise locations.
Assemblyman Chris Holden, D-Pasadena, who authored the bill, said it will establish “a new standard that inspires a safe and prosperous environment within the fast food industry.”
With a legislative session set to conclude later this week, fast-food workers and supporters across California are urging lawmakers to quickly advance the amended bill through the Assembly and Senate and send it to Gov. Newsom’s desk.
Matt Haller, president & CEO of the International Franchise Association, said the agreement is “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 in a statement.
But businesses say additional regulations and higher wages will force fast-food outlets to boost prices for consumers who are already grappling with inflation. In some cases, they say it could result in the closure of restaurants.
Ingrid Vilorio, a California fast-food worker and leader in the Fight for $15 and a Union, applauded the newly forged agreement.
“For the last decade, fast-food cooks, cashiers and baristas in California have been sounding the alarm on the poverty pay and unsafe working conditions plaguing our industry,” Vilorio said in a statement. “We need a seat at the table with our employers and the power to help shape better rules across our industry.”
Joseph Bryant, executive vice president of the Service Employees International Union, and other labor groups say the industry is in dire need of regulation because of low wages, erratic scheduling and harsh working conditions that are often controlled, not by the fast-food corporations, but by franchise operators.
“The amendments to AB 1228 put aside valid concerns about the franchisor-franchisee relationship in favor of bringing stakeholders from across the industry together with workers to solve common problems and build a better future,” Bryant said.
The fast-food council’s new rules would also apply to more restaurants — those with at least 60 locations nationwide, as opposed to 100 nationwide as outlined in the 2022 law.
The deal also removes a provision that would allow cities and counties to convene their own fast-food councils, which businesses said could create a burdensome number of additional regulations.
SEIU said California’s fast-food industry stands out as one of the state’s largest and fastest-growing low-wage sectors. Nearly 80 percent of the workers are people of color, the union said, and more than 60 percent are Latino/Latina and two-thirds are women.