California recently enacted a law that could raise the minimum wage for fast food workers to over $20 an hour. The new law establishes a council to oversee labor conditions in the quick-service industry with broad authority to adopt rules concerning wages and working conditions in the industry. The law also gives fast food employees a powerful cause of action to protect their rights.

On September 5, 2022, Governor Newsom signed A.B. 257, the Fast Food Accountability Recovery Act or FAST Recovery Act. The law establishes a ten-member Fast Food Council that will be part of the California Department of Industrial Relations (DIR), remaining in place until 2029. The Council will be composed of a mix of representatives for fast food employees and advocates, fast food franchisors and franchisees, as well as the DIR and the Governor’s Office of Business and Economic Development.

The Council will have wide authority to set minimum standards for wages, working hours, and working conditions. They will be tasked with addressing a range of issues including health and safety standards, workplace security, protected leave, and workplace harassment, on top of wages. Fast food wages can be raised even higher than the state-wide minimum, but they cannot exceed $22 an hour in 2023.

The law covers fast food restaurant chains with at least 100 locations nationwide; it is expected to affect around 550,000 fast food employees across the state. According to recent surveys, the majority of franchise fast food workers in California earn close to minimum wage and are adults of color.

The FAST Act also provides a venue for aggrieved employees to sue based on wrongful discharge, discrimination, or retaliation for exercising rights established by the law. Any employer who takes adverse action against a worker within 90 days of learning that an employee exercised rights protected under the new law will face a presumption of unlawful retaliation or discrimination.

The law raises a number of interesting questions. Fast food operators have raised concerns about how they are meant to offset the increase in costs, especially if wages are raised to the Council’s upper limit. Employers argue that they will be forced to pass on their increased costs to customers by way of raised prices--a burden that will not be shared by other food industries, such as grocery stores or bakeries. There may be some ambiguity about which restaurant chains are covered by the law as well. Even unaffected restaurants may have to raise their wages and labor standards in order to compete for workers. Franchisors and franchisees will, however, have four of the ten seats on the council, as will advocates for workers, which is likely intended to limit the Council’s ability to do anything that would too severely burden employers.

Workers’ rights organizations laud the bill as a step toward “sectoral bargaining,” which refers to collective bargaining across entire industries as opposed to unionizing at individual establishments. Employees of individual restaurants or companies often lack the leverage to negotiate on an even keel with their employer; sectoral bargaining gives them the power to advocate in a more efficient and, overall, effective manner. If ultimately successful, the new law could encourage California and other states to even out the scales between workers and employers in other low-wage industries.