California decides to implement the Fast Act on Jan. 1 despite the move toward a referendum

Restaurant advocates have already filed a lawsuit to block the highly unusual move, which the action asserts is a clear violation of the state constitution.
California Gov. Gavin Newsom / Photo: Shutterstock

UPDATE: A California court has put the Fast Act back on hold until Jan. 13 at the earliest.

California has alerted leaders of the restaurant industry that it intends to begin adoption of the Fast Act, a law that involves fast-food workers in the process of setting their own wages, on Jan. 1, or roughly two years earlier than expected.

A coalition representing the restaurant industry filed a lawsuit Thursday to block the state from adopting the measure before voters decide in a 2024 referendum if they want the law to take effect. Under California’s constitution, a measure being put to a referendum vote is suspended until ballots are cast and the public’s preference is determined.

More than 1 million California voters have signed a petition circulated by the coalition, known as Save Local Restaurants, to get the referendum on the ballot. By law, fewer than 700,000 were required.

California’s Department of Industrial Relations (DIR) has acknowledged the state’s receipt of the signatures and indicated that it is currently validating the batch. But because that process is underway rather than completed, and may not be completed by Jan. 1, the state intends to proceed with adoption, said Katrina Hagen, director of the DIR.

“If and when the referendum challenging AB 257 qualifies for the ballot, the law will be put on hold,” Hagen wrote in a letter to various stakeholders, using the technical name of the Fast Act.

Among the recipients were representatives of the National Restaurant Association. The association is a partner in the coalition, along with the International Franchise Association and the U.S. Chamber of Commerce.

The lawsuit filed by Save Local Restaurants challenges the constitutionality of that decision by DIR. It contends that the move clearly violates the referendum provisions of California’s constitution. Those stipulations have been part of the constitution for 100 years, the plaintiffs say.  More than 50 referendums have been passed under that prescribed process since referendum guidelines were adopted.

The restaurant industry had assumed that it had nearly two years—from early December, when the signatures were submitted, to the referendum appearing on the early November 2024 ballot—to sway voters to vote down the Fast Act. That effort was expected to cost the industry at least tens of millions of dollars and considerable effort.

In addition, similar legislation is expected to be introduced in additional states and some municipalities in short order, with Minneapolis cited as the most likely site of the next lobbying battle.

It is unclear what would transpire if adoption of the law proceeds on Jan. 1 and the signatures are subsequently approved, putting the referendum on the 2024 ballot.

The Fast Act was signed into law by California Gov. Gavin Newsom on Labor Day.  It essentially creates a new model for setting the wages and working conditions of fast-food workers employed in units that are part of a chain with at least 100 branches nationwide. 

The essential provision is the creation of a 10-person Fast Food Council empowered to set wages and working conditions. Two of the 10 seats are reserved for fast-food workers and two more for union representatives.  Fast-food franchisors get two seats, as do representatives of restaurant franchisees within the states. The remaining two seats will be held by state officials.

Provisions allow the council to raise the minimum wage for covered employees to $22 an hour in 2023 alone, with 3% cost-of-living adjustments each year afterward. California's minimum wage across all industries rises to $15.50 on Jan. 1.

The law specifies that all council members will be appointed by the governor.

It also permits any California municipality with at least 200,000 residents to set up their own Fast Food Council.

The lawsuit from Save Local Restaurants was filed in the Superior Court of California in Sacramento.





Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.


Exclusive Content


Reaction to Wendy's dynamic pricing test reveals its risks

The Bottom Line: The burger chain mentioned last week that it would test the pricing strategy sometime next year. Consumers frustrated with prices reacted swiftly.


Why the Burgerim settlement exposes flaws in franchise oversight

The Bottom Line: The federal government allowed the chain’s founder to avoid major penalties by simply paying $1,000. What’s the point of regulation in the first place?


Why the Smashed Jack sparked record-smashing demand at Jack in the Box

Behind the Menu: The chain’s newest menu addition aims to break the mold on what a fast-food burger can be, and customers are buying in.


More from our partners