On September 11, 2023, the coalition of California businesses announced its agreement with labor unions to withdraw their referendum challenging Assembly Bill (AB) 257, which created the FAST Recovery Act, from next year’s ballot.

Last year, Governor Newsom signed AB 257. The Act established a Fast Food Council comprising fast food employees, worker advocates, franchisors, franchisees, and government officials from the Department of Industrial Relations and the Governor’s Office of Business and Economic Development.

Almost immediately, a referendum effort was launched which would give California voters the opportunity to reject the measure.

While AB 257 was paused pending the referendum, the California legislature proceeded with reviving the Industrial Welfare Commission, seen as the state’s attempt to push through similar efforts to increase regulations and expansion of union involvement in industries such as the fast-food industry. In addition, another bill, Assembly Bill (AB)1228, was introduced. That bill would have imposed liability on franchisors for violations of the Fair Employment and Housing Act, the Labor Code, Cal/OSHA, and other workplace laws as well as exposing franchisors to liability under the Private Attorneys General Act.

In exchange for withdrawing the referendum on AB 257, AB 1228 was significantly revised. The amended bill does not include franchisor liability but instead resurrects the Fast Food Council that was originally included in AB 257.

As with AB 257, the amended AB 1228 would give the Fast Food Council the authority to set minimum employment standards for fast food restaurants, including wages, hours, health and safety, and other working conditions. It would set an initial minimum wage of $20 per hour effective April 1, 2024, and permit the Council to establish further increases based on increases to the Consumer Price Index. The bill as amended would also permit local jurisdictions to establish more protective labor standards but would preclude them from setting wages different from those set by the Council. The Council’s authority would sunset on January 1, 2029.

AB 1228 has not made its way out of the legislature and has only until midnight on September 14 to be sent to the Governor. However, in light of the agreement between the two sides, it is expected the bill will make its way to Governor Newsom and be signed.