Fast-food restaurants in California have been given a reprieve from the state’s implementation of the Fast Act wage law on Jan 1, the result of a surprise decision Friday by a state court.
The Superior Court of Sacramento issued a temporary restraining order on Friday to block adoption of the measure less than 48 hours before it was due to take effect. The judicial body decided that the first-of-its-kind law should not be implemented until the court has a chance to hear a lawsuit filed Thursday by a coalition looking to overturn the legislation via a referendum on the November 2024 state ballot. The hearing is scheduled to begin on Jan. 13.
Under California’s constitution, laws that are put to a referendum vote are suspended until voters decide if they want to keep or kill the measures. But a state regulatory agency stunned the restaurant industry by deciding it would go ahead and implement the Fast Act, technically known as AB 257, on Jan. 1, or nearly two years sooner than expected.
The California Department of Industrial Relations (DIR) said that the referendum was not yet approved for the 2024 ballot because the 1.1 million signatures submitted to put the proposal before voters have yet to be deemed legitimate. Because the vetting process is still underway, and likely won’t be completed before New Year’s Day, the referendum has not yet been approved, and hence the law should indeed be adopted on Jan. 1, as the legislation specifies, the DIR decided.
The signatures were collected by a trade-group coalition called Save Local Restaurants and delivered to state officials in early December. When the DIR announced several days ago that the law would go into effect, the coalition immediately filed a lawsuit challenging the constitutionality of the regulatory agency’s decision.
The court’s temporary restraining order is the latest hairpin curve in what’s been a rollercoaster ride for the restaurant business. The industry had believed it had almost two years to muster public opposition to the Fast Act, a process that promised to be extremely difficult and expensive.
The measure creates a new process for determining the wages and workplace standards for employees of restaurants that are part of a chain with at least 100 branches nationwide. It creates a 10-person Fast Food Council with the authority to set wage rates and working conditions.
Four of the seats are reserved for fast-food workers and union advocates, giving them 40% of the say on matters that were previously determined by the state legislature and employers. Another two seats are reserved for fast-food franchisees, with two more slated for restaurant franchisors, matching labor’s 40%. The last two seats will be occupied by state officials. All members will be appointed by the governor.
The Council has the legislative authority to raise California’s minimum wage for qualifying fast-food workers to $22 during 2023, compared with the rate that takes effect for all workers on Jan. 1 of $15.50.
It is not clear if Gov. Gavin Newsom has yet chosen the members of the Council. The Democrat signed the Fast Act into law on Labor Day.
The Fast Act also specifies that any jurisdiction in California with at least 200,000 residents can create its own Fast Food Council to set a local minimum wage for fast-food workers.
Copies of the law are expected to be introduced in other states and some municipalities in the weeks or months to come.
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