Opponents of California fast food law withdraw

Backers of a referendum challenging the state’s upcoming Fast Food Council pull out, paving the way for Assembly Bill 1228

(Adobe/Seika)
(Adobe/Seika)
Darren Fraser
Published January 7, 2024  • 
11:00 am

SACRAMENTO – The backers of a referendum that would have challenged the creation of a Fast Food Council – and qualified for the Nov. 5, 2024 General Election – decided to pull the measure.

Kathy Fairbanks is with Save Local Restaurants, which is a coalition of restaurants and other parties that opposed Assembly Bill (AB) 257. In an email to The Times, Fairbanks said the coalition negotiated with Holden’s office to change certain provisions of AB 257. According to Fairbanks, AB 1228 was the result of that compromise. Fairbanks said backers of the referendum agreed to pull it before Jan. 1 as part of the negotiated compromise.

In a Dec. 29, 2023 press release, Secretary of State Shirley N. Weber, Ph.D. said that as a result of the withdrawal of the referendum, certain provisions AB 1228 – which Gov. Newsom approved Sept. 28, 2023 – became operative on Jan. 1.

Assemblymember Chris R. Holden, D-District 41, was the one to introduce AB 257. The bill, which Newsom approved Sept. 5, 2022, enacted the Fast Food Accountability and Standards Recovery Act or FAST Act. AB 257 would have increased the minimum wage for fast food workers to $22 per hour and would have established a Fast Food Council (Council). According to the bill, the 10-member Council would establish minimum standards for wages, working conditions, and the maximum number of hours an employee could work.

However, AB 257 received considerable pushback from multiple organizations, including various California restaurant associations as well as from the big fast food corporations. AB 257 also prompted Amber Evans and Steven McDermed to launch Referendum #1939 in September 2022 to block the bill. 

Evans and McDermed collected the requisite number of signatures – 623,212 – and met all filing deadlines, as laid down by the Secretary of State, for the referendum to qualify for the November 2024 election.

As Evans and McDermed pursued their referendum, Holden – perhaps sensing that the challenges to AB 257 imperiled the entire legislation – introduced AB 1228, a less comprehensive version of AB 257. The new legislation jettisoned the FAST Act. It also lowered the new minimum hourly wage to $20.

AB 1228 kept the Council and the Council retained many of its powers delineated in AB 257, including the authority to introduce annual wages beginning in 2025 and lasting through 2029.

The bill also reduced the number of voting Council members to nine. The Council will include two representatives of the fast food industry, two fast food restaurant owners, two fast food employees, two representatives of advocates for fast food employees, and a member of the general public; a person unaffiliated with the fast food restaurant industry.

In addition to the nine voting members, the Council will include two non voting members – one from the Department of Industrial Relations and one from the Governor’s Office of Business and Economic Development.

The Council continues to exercise oversight over industry standards, including health and safety and working conditions. But whereas AB 257 would have held the big fast food corporations liable for violations at individual restaurants, AB 1228 absolves them of culpability.

According to AB 1228, the Council must convene its first meeting no later than March 15, 2024.

There are other, minor differences. AB 257 identified fast food chains as having 100 or more restaurants nationwide; AB 1228 reduced this number to 60. AB 1228 also removed the Industrial Welfare Commission budget appropriation. 

THE IMPACT

According to a report by CDF Labor Law LLP, AB 1228 will have rippling effects across the restaurant industry.

In a blog on the firm’s website, Holly C.F. Soliman writes, “If a fast food worker will be earning $20 per hour, the rippling effect is that to attract workers, full-service restaurants may also need to raise hourly pay.” Soliman writes that the effects of AB 1228 may spill over into other hourly-pay positions, including retail and factory workers.

She writes that an unintended consequence is the effect a higher hourly wage will have on salaried employees in the restaurant industry. According to California law, to be classified as an exempt employee, a worker must earn no less than twice the minimum wage. Soliman writes that the $20 per hour minimum means an exempt employee’s minimum salary must be $83,200.

Soliman notes that proponents of the bill argue that it gives California’s 500,000 plus fast food workers a say when it comes to wages and working conditions. She also notes that critics of the Council say that having two government employees on the Council who have input on wages, which constitutes a restaurant’s greatest expense, may negatively impact a business’s bottom line.

Darren Fraser
Reporter