With the assistance of California governor Gavin Newsom, fast food companies that supported a referendum to reverse the 2022 Fast Food Accountability and Standards Recovery Act (“AB 257”) struck a deal with several labor unions, including the Service Employees International Union, to revise some of AB 257’s most controversial provisions.  In exchange for an agreement on this new bill (“AB 1228”), fast food companies agreed to withdraw the referendum that was set for a vote in 2024.

AB 257 set new statewide minimum pay rates for an entire sector of employees regardless of restaurant location or the impact on local markets.  It also required the creation of a statewide Fast Food Council comprised of labor and employer representatives that had the authority to set sector-wide minimum wages and working conditions, and included a minimum wage pay increase up to $22 per hour for employees of restaurants with more than 100 locations.  AB 257 also provided for the creation of regional councils that could set additional pay rates based on local conditions.  In contrast, the statewide minimum wage for all other hourly employees increases to only $16 per hour on January 1, 2024. 

In comparison, while AB 1228 also seeks to increase fast food workers’ minimum wage rate, starting April 1, 2024, wages would increase to $20 per hour in restaurants that have at least 60 locations nationwide.  If passed, local authorities would be unable to further increase hourly wages for fast food workers in their region until the expiration of the agreement in 2029.  The bill creates an exception for restaurants that currently make and sell their own bread as a “stand-alone menu item.” 

Like the previous version, AB 1228 maintains the creation of a Fast Food Council but, unlike AB 257’s version, any recommendations on working conditions promulgated by the Council would be subject to the rulemaking process as required by the Administrative Procedure Act.  “Working conditions” include such subjects as wages, fast food restaurant employees’ health and safety conditions, workplace security, the right to take time off work for protected purposes, and the right to be free from discrimination and harassment in the workplace. 

The Fast Food Council is to be housed under the Department of Industrial Relations (“DIR”), with additional jurisdictional oversight by the Occupational Safety and Health Standards Board and the Civil Rights Department.  The Council’s nine members would be broken down as follows:  two members from the fast food industry; two fast food restaurant franchisees or owners; two fast food restaurant employees; two representatives of advocates for fast food restaurant employees; and one unaffiliated member of the public.  In addition to the voting members, the Council would have two nonvoting members, one from the DIR and one from the Governor’s Office of Business and Economic Development.

Part of the deal reached by the two sides includes an agreement to kill the three million dollars that had been set aside for the Industrial Welfare Commission, which has gone unfunded for almost 20 years, and to eliminate portions of the bill that had sought to impose liability on franchisors for a franchisee’s violations of various employment laws.

AB 1228 must pass both houses of the California legislature and be signed by the governor before it would take effect.

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Photo of Elizabeth N. Hall Elizabeth N. Hall

Elizabeth N. Hall is a Shareholder in the firm’s Labor and Employment practice area and serves as the Chicago office chair of the firm’s women’s affinity group, “Women at Vedder Empowering Success” (WAVES).

Ms. Hall represents a wide range of employers before state

Elizabeth N. Hall is a Shareholder in the firm’s Labor and Employment practice area and serves as the Chicago office chair of the firm’s women’s affinity group, “Women at Vedder Empowering Success” (WAVES).

Ms. Hall represents a wide range of employers before state and federal courts and administrative agencies, as well as in arbitral forums, defending them against various claims, including single plaintiff and class allegations of employment discrimination, failure to accommodate disabilities, sexual harassment, wrongful and retaliatory discharge, breach of contract and violations of the FMLA and wage and hour laws. Ms. Hall has successfully argued procedural and employment discrimination issues in the U.S. Court of Appeals for the Seventh Circuit and has particular expertise in managing electronic discovery teams in complex litigation.

A significant portion of Ms. Hall’s daily practice involves providing practical advice to employers regarding risk management; effective employee discipline and discharge; conducting workplace investigations; accommodating disabilities and pregnancy; workplace violence; managing leaves of absence and complying with FMLA and state leave requirements; workforce reductions; drafting and reviewing employment, recruitment and staffing agreements; policy and handbook development; wage and hour compliance; and state and federal employment laws. She frequently trains clients and employer groups on many of these topics.  Ms. Hall also has extensive experience drafting and negotiating severance, settlement and conciliation agreements on behalf of employer clients.

In 2017 and 2018, Ms. Hall was recommended by The Legal 500 United States for the Labor and Employment Disputes (including collective actions): Defense category. In 2018, she was named to the Crain’s Custom Media “Chicago Notable Women Lawyers” list. She also was selected as an Emerging Lawyer, an affiliate of Leading Lawyers, from 2015 to 2019. From 2010 to 2015, Ms. Hall was selected for inclusion as an Illinois Rising Star, and Super Lawyers named her one of the “Top Women Attorneys in Illinois” in the “Rising Star” category in 2013 and 2014.