Restaurant operators are reviewing options after Governor Gavin Newsom (D) signed the FAST Act on Labor Day, September 5th following passage by the Legislature on Monday, August 29th. The FAST Act establishes a Council that will determine wage rates that may exceed $20 per hour for QSR workers in certain regions of the state. The Council will comprise ten members with representatives of workers, unions, and employers selected by the Governor. The Bill includes a sunset provision for the Council that will take effect in 2028 unless renewed.

A coalition termed “Protect Neighborhood Restaurants” presumably formed from the California Restaurant Association has proposed a referendum to overturn the law. This will require collection of at least 623,000 valid signatures by December 4th to place the issue on the 2024 ballot. Restaurant interests spent over $1 million on lobbying against the Act resulting in some modifications to the final version including a $22 per hour wage cap.

The Act will have a disproportionately negative effect on chains that own their own locations including Chipotle and Starbucks compared to competitors operating with a franchise model.

If the revocation becomes a Proposition the resulting outlay on advertising to attract support by both organized labor and the restaurant industry may exceed $100 million. About $220 million was expended on Proposition #22 in 2020 involving the employment status of ride-share drivers.