California Fast Food Law Temporarily Blocked

Author: Michael Cardman, HR & Compliance Center Senior Legal Editor

January 4, 2023

A new law to raise the wages and working conditions of fast food workers in California has been temporarily blocked.

The Fast Food Accountability and Standards Recovery Act (FAST Recovery Act) had been scheduled to take effect January 1. But two days earlier, a court issued a temporary restraining order prohibiting the California Department of Industrial Relations (DIR) from implementing or enforcing the law.

Although there remains a chance the law could still take effect at a later date, it now faces an uphill battle.

Background

The FAST Recovery Act was signed into law last September. It establishes a new 10-member Fast Food Council and vests it with the authority to set employment standards for fast food restaurants, including wages, working conditions and training. It calls for the Council to recommend regulations to the state legislature by January 15. Those regulations would take effect October 15 unless the legislature enacts legislation preventing them from taking effect.

One day after the law was signed, a coalition of the law's opponents called the Protect Neighborhood Restaurants Association began an effort to overturn the Act via California's referendum process, which, among other things, gives voters the power to challenge enacted laws.

By December 5, 2022, the coalition announced it had gathered signatures from more than 1 million voters in favor of repealing the law.

California Secretary of State Shirley N. Weber gave preliminary approval to the referendum and her office began the process of verifying the signatures via random sampling. If Weber verifies that at least 623,212 signatures are valid, the referendum will be placed on the November 2024 ballot and the law will be suspended in the meantime.

The coalition has argued the administrative review of the signatures interferes with its constitutional right to suspend an objectionable law from taking effect. But the DIR disagreed. In a letter to the coalition's attorneys, it wrote: "If and when the referendum challenging [the FAST Recovery Act] qualifies for the ballot, the law will be put on hold. But in the absence of clear authority providing that [the law] is suspended merely upon submission of unverified signatures, DIR has an obligation to proceed with implementing the duly enacted statute."

In response, the coalition filed a lawsuit seeking the temporary injunction, which was granted.

What's Next

A hearing in the case is scheduled for January 13.

Even if the DIR should prevail and the injunction is lifted, the Secretary of State could still qualify the referendum for the ballot - which also would put the law on hold until the 2024 election.

As of December 30, 2022, a random sampling of signatures showed that 77% of the coalition's signatures were valid. Should that ratio hold up, it would be more than enough signatures for the referendum to be qualified.

The stakes are high for fast food businesses.

The National Restaurant Association predicted California may push to expand the law to include full-service chain restaurants and independent restaurants. It also predicted that other states - including Illinois, New York, Oregon and Washington - will try to enact similar legislation.