Seyfarth Synopsis: The Governor has approved a new and adjusted Fast Food Council responsible for establishing minimum standards on wages and for developing minimum standards for other topics affecting workers in the industry, including health and safety conditions, protected time off work, and discrimination, harassment, and retaliation.

Fresh Bill Off The Grill

On the heels of the FAST Act in 2022, Governor Newsom approved AB 1228, the Fast Food Franchisor Responsibility Act, on September 28, 2023, which will increase minimum wage for half a million California fast-food workers to $20 an hour, effective April 1, 2024.

FAST Act Placed On The Back Burner

On Labor Day in 2022, Governor Newsom signed AB 257, the Fast Food Accountability and Standards Act (or FAST Recovery Act), which was slated to go into effect January 1, 2023. Immediately after it was signed, the Save Local Restaurants coalition submitted over 1 million signatures in support of a referendum to overturn the law. They later filed a lawsuit, and in January 2023 obtained a preliminary injunction preventing AB 257 from going into effect pending: (1) completion of the referendum process, including signature verification, and (2) if the referendum petition qualifies for the ballot, approval by the majority of California voters at the November 2024 election. 

If allowed to take effect, AB 257 would establish a 10-member Fast Food Sector Council, within the Department of Industrial Relations, responsible for setting “sector-wide” minimum standards on wages, working hours, and other working conditions “adequate to ensure and maintain the health, safety, and welfare of, and to supply the necessary cost of proper living” for fast food workers. The law would also protect covered employees from discrimination or retaliation for filing a complaint, or refusing to work based on a reasonable belief that the condition of the restaurant violates worker health and safety laws.

Happy Meal Deal

The new legislation, AB 1228, is very similar to AB 257, and incorporates much of the same language, but there are some notable differences. Those differences are the product of collaboration between Governor Newsom, the Save Local Restaurants coalition, and the Service Employees International Union (SEIU). Ultimately, the parties were able to reach a deal consisting of withdrawing the referendum challenging AB 257 in exchange for a $20 minimum wage, the creation of a new Fast Food Council, and the exclusion of joint-employer liability provisions.

Who’s Wrapped Up In This?

AB 1228 covers national fast food chains, which are defined as consisting of at least 60 establishments that  share a common brand, décor, marketing, packaging, products, and/or services and that are primarily engaged in:

  • Providing food and beverages for immediate consumption on or off premises;
  • To customers to order/select items and pay before consuming; and
  • With limited or no table service.

Fast food restaurants that operate in a grocery store where the grocer employs the restaurant’s employees and bakeries are exempt from coverage. 

New Council With New Ingredients 

Like AB 257, AB 1228 will establish a Fast Food Council, within the Department of Industrial Relations. This Council will serve the same purpose as the one established in AB 257 but with a far more circumscribed role. The Council’s authority regarding sector-wide standards is limited to developing and proposing minimum employment standards to the appropriate regulatory agency, except with respect to minimum wage increases. 

Unlike AB 257, the Council created by AB 1228 will consist of nine members rather than ten.  The members will be appointed fast food workers and their advocates, franchisees or restaurant owners, a representative from the fast food restaurant industry, and an unaffiliated member of the public. Each member of the Council will serve a term of four years and cannot serve more than two consecutive terms.

A Side of Protection For Employees

Covered employers are prohibited from discharging, discriminating, or retaliating against any employee due to their participation in or testimony to any proceeding convened by the Council. However, unlike AB 257, there is no rebuttable presumption of unlawful discrimination or retaliation.

Free Of Joint And Several Liability

When AB 1228 was first introduced, it contained joint-employer liability provisions that would have had franchisors share civil responsibility and liability for franchisees’ labor violations. As part of the comprise between Governor Newsom, Save Local Restaurants, and SEIU, such provisions were tossed.

Workplace Solutions

Fast food chain employers should reach out to the authors or your favorite Seyfarth attorney for solutions and recommendations to ensure compliance with AB 1228 before April 1, 2024.  Check out the CalPeculiarities Blog for updates on other laws affecting California employers.

Edited by Cathy Feldman and Coby Turner