California Passes Law to Standardize Wages, Other Regulations for Fast Food Industry Workers

The new legislation could see fast food worker minimum wage go as high as $22 next year.

A fast food worker frying french fries
Photo: FG Trade / Getty Images

On Monday, California Governor Gavin Newsom signed the Fast Food Accountability and Standards (FAST) Recovery Act into law, creating sweeping new regulations for the state's fast food industry.

The primary effect of the legislation, for at least the next six years, is the creation of a new ten-member Fast Food Council with the stated goal of establishing "sectorwide minimum standards on wages, working hours, and other working conditions related to the health, safety, and welfare of, and supplying the necessary cost of proper living to, fast food restaurant workers" — specifically applying to any chain with 100 or more locations nationally.

The resulting council — which is primarily selected by the governor and includes two representatives each from fast food restaurant franchisors, franchisees, employees, and employee advocates, alongside one each from the Governor's Office of Business and Economic Development and the Department of Industrial Relations, which oversees the council — could have far reaching implications, but one of the most discussed is their power to dictate a statewide minimum wage for the industry, which the law states cannot exceed $22 per hour for 2023.

"California is committed to ensuring that the men and women who have helped build our world-class economy are able to share in the state's prosperity," Governor Newsom stated. "Today's action gives hardworking fast-food workers a stronger voice and seat at the table to set fair wages and critical health and safety standards across the industry. I'm proud to sign this legislation on Labor Day when we pay tribute to the workers who keep our state running as we build a stronger, more inclusive economy for all Californians."

The restaurant industry had opposed the legislation on multiple fronts. Sean Kennedy, the National Restaurant Association's executive vice president for public affairs, suggested it piled on more "walls and hurdles for both restaurant owners and workers when there are strict regulations already in place." He continued, "The expected higher wage mandates alone could raise costs for California quick service restaurants by $3 billion and that cost will likely spread to struggling independent restaurants as well. At a time when California restaurants are struggling with skyrocketing inflation in food prices and operating costs, this bill will push many owners closer than ever to shutting their doors in their communities."

Meanwhile, the International Franchise Association argued that franchises, though involved with larger companies, are often themselves small businesses. "The bill creates an arbitrary standard for one sector of workers while punishing small business owners and their customers," the group stated before the bill was signed, according to Nation's Restaurant News. "Franchising has opened the door for hundreds of thousands of entrepreneurs to pursue their dreams and millions of workers to establish a career, but this bill stands to break all that down while raising prices for Californians and forcing restaurants to close their doors."

However, California Assemblymember Chris Holden, who authored the bill, saw the new system as a way to resolve issues within the industry. "As a former franchisee, I am aware that time is of the essence and with AB 257, we have a chance to lift up small business owners and essential workers swiftly with an inclusive approach to business," he said after the bill was passed in the state assembly. "Creating a stakeholder driven council, ensures that all voices at the table are heard and considered. This innovative template helps us do better to foster improved working environments for all Californians."

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