Gov. Newsom signs legislative compromise on fast food restaurant minimum wage and working conditions; campaign announces it will withdraw referendum

California Gov. Gavin Newsom (D) signed Assembly Bill 1228 (AB 1228) on Sept. 28. AB 1228 is a legislative compromise reached with proponents of a veto referendum on a different bill (Assembly Bill 257) that qualified for the 2024 ballot. AB 1228 will repeal AB 257, which was passed during the 2022 legislative session. AB 1228 will also increase the minimum wage for fast food employees of chain restaurants with more than 60 locations nationwide to $20 and establish a fast food council to oversee future wage increases and working conditions. The wage increase will take effect on April 1, 2024.

Save Our Local Restaurants, the campaign behind the veto referendum of AB 257, announced the legislative compromise on Sept. 11 and said they would withdraw their ballot measure by Jan. 1, 2024. According to the new agreement under AB 1228, AB 257 would not be officially repealed until the referendum is withdrawn. AB 257 was suspended when the referendum qualified for the ballot.

The referendum will be the first withdrawn from the ballot in California’s history under a new law, Assembly Bill 421, which authorizes veto referendum proponents to withdraw their qualified referendum at least 131 days before the election or when a referendum qualifies with less than 131 days before the election when a petition is certified. Proponents of initiated constitutional amendments and state statutes have had the power to withdraw qualified initiatives since 2014. Proponents of eight California initiatives have withdrawn their proposals prior to the 131-day deadline.

AB 257 would have authorized the creation of a 10-member fast food council within the Department of Industrial Relations. AB 257 would have also authorized the council to “establish sectorwide 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 to, fast food restaurant workers.” The labor commissioner would have been required to investigate alleged violations and order appropriate remediation.

AB 257 would also have authorized the council to adopt a minimum wage for fast food restaurant employees not to exceed $22 per hour at its implementation and increase it every year by the lesser of 3.5% or rate of change in inflation.

Save Local Restaurants reported $21.5 million in contributions as of June 30. The top donors to the campaign were Chipotle Mexican Grill ($2.8 million), In-N-Out Burgers ($2.8 million), and Starbucks ($2 million).

Sean Kennedy, executive vice president of Public Affairs for the National Restaurant Association and co-chair of the Save Our Local Restaurants campaign, said, “The governor’s signature on this bill brings to an end a years-long and expensive fight over the regulation of the California quick service industry. We appreciate Governor Newsom’s efforts to bring the sides together and his show of support in signing into law the final agreement. There are significant challenges created by this law that restaurants will have to navigate, but they will do it with stable and predictable regulation that they wouldn’t have had under the FAST Act or IWC.”

Assemblymember Chris Holden (D-41), the primary sponsor of AB 257 and AB 1228, said, “Today, we witnessed the signing of one of the most impactful fast food wage laws that this country has ever seen. … My goal for AB 1228 was to bring relief and solutions where they were needed and together with my colleagues and Governor Newsom, that is what we have done.”

AB 1228 passed along party lines in the Senate by a vote of 32-8 and in the state Assembly by a vote of 53-17.

One other veto referendum has qualified for the 2024 ballot. It would repeal Senate Bill 1137 (2022), which would prohibit new oil and gas wells within 3,200 feet of homes, schools, nursing homes, and hospitals and require companies to adopt health, safety, and environmental requirements.

In California, voters have voted on 50 veto referendums, upholding laws 21 times (42%) and repealing laws 29 times (58%). 

Additional reading: 

California 2024 ballot propositions

List of California ballot initiatives that were withdrawn after signature verification