Fast-food companies that spent millions of dollars to defeat a worker-protections law have agreed to withdraw their referendum from the November 2024 ballot. This move will result in a $20-an-hour minimum wage for employees.
In order to avoid a costly battle with labor unions, the California Legislature must approve the agreement by Thursday.
The pay increase, while considered modest, will take effect in April. According to UC Berkeley economist Michael Reich, the average hourly wage for fast-food workers in California was about $19 in December.
This decision, which has been celebrated by fast-food cooks, cashiers, and baristas, will lead to the introduction of amendments to Assembly Bill 1228. It will also pave the way for the creation of a fast-food council, as authorized by Assembly Bill 257, also known as the FAST Recovery Act.
The fast-food council will establish minimum standards for wages and provide recommendations on working hours to ensure the health, safety, and wellbeing of workers. It will also have the authority to raise the fast food minimum wage to as high as $22 an hour.
The council will consist 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 convene by March 15, earlier than if it had to wait for voter approval in November 2024.
The amendments to AB 1228 will also eliminate a controversial proposal that would have held fast-food corporations legally accountable for harassment, wage theft, or labor violations occurring at franchise locations.
Assemblyman Chris Holden, D-Pasadena, the author of the bill, stated that it will establish “a new standard that inspires a safe and prosperous environment within the fast food industry.”
With the legislative session set to conclude later this week, fast-food workers and their supporters in California are urging lawmakers to expedite the passage of the amended bill through the Assembly and Senate and send it to Governor Newsom’s desk.
Matt Haller, president & CEO of the International Franchise Association, expressed that the agreement is “in the best interest of workers, local franchise restaurant owners, and brands.”
He further stated, “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.”
However, businesses argue that additional regulations and higher wages will compel fast-food outlets to raise prices for consumers who are already grappling with inflation. In some cases, they believe it may lead to the closure of restaurants.
Ingrid Vilorio, a California fast-food worker and leader in the Fight for $15 and a Union, commended the newly forged agreement, stating, “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. 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, along with other labor groups, argues that the fast-food industry urgently needs regulation due to low wages, unpredictable scheduling, and harsh working conditions that are often dictated by franchise operators rather than fast-food corporations.
“The amendments to AB 1228 set 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 new rules of the fast-food council will also apply to more restaurants, specifically those with at least 60 locations nationwide, as opposed to the 100 locations outlined in the 2022 law.
The agreement also eliminates a provision that would have allowed cities and counties to establish their own fast-food councils, which businesses argued could result in an excessive number of additional regulations.
The Service Employees International Union stated that California’s fast-food industry is one of the state’s largest and fastest-growing low-wage sectors. The union emphasized that nearly 80 percent of the workers in this industry are people of color, with over 60 percent being Latino/Latina and two-thirds being women.
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