On Thursday, the Save Local Restaurants Coalition—formed by the U.S. Chamber of Commerce, the National Restaurant Association, and the International Franchise Association—filed a lawsuit to stop California from implementing the FAST Act, or Assembly Bill 257, on January 1.

As part of the state’s referendum process, if enough signatures are collected in opposition to a law, it can’t go into effect until Californians have a chance to vote on the proposed legislation. 

The Coalition collected more than 1 million petition signatures to place a referendum on the FAST Act, which would allow voters to decide the fate of the fast-food law on the November 2024 ballot if enough signatures are validated. The Coalition then submitted the referendum ahead of the December 5 deadline, and exceeded the 623,212 signatures required by state law. 

But in an email to the Coalition’s lawyers at Nielsen Merksamer on December 27, California’s Department of Industrial Relations (DIR) stated it would not suspend the implementation of AB 257 until the referendum signatures were verified—meaning AB 257 would go into effect on January 1, at least temporarily.

The FAST Act, or Fast Food Accountability and Standards Recovery Act, was signed by California Gov. Gavin Newsom in September and would create a 10-member council appointed by the governor and certain legislators. The council would consist of two fast-food franchisors, two franchisees, two employees, two advocates of workers rights, one representative from the DIR, and one from the Governor’s Office of Business and Economic Development. 

The Fast Food Council would have the power to raise minimum wage up to $22 per hour, and increase it by up to 3.5 percent every year thereafter. (For perspective, California’s minimum wage is $15 and will move to $15.50 at the start of 2023.) The bill would impact more than 550,000 workers across more than 30,000 locations.

To give a bit of context, in the state’s prior 52 referendum cases over the past 100 years, a referendum has frozen the enforcement of laws until voters have had a chance to vote on the matter. 

“Not in a single one of those prior instances did the State ever attempt to temporarily enforce the referred statute while the signature review process was underway,” Kurt Oneto, Nielsen Merksamer attorney, said in a statement. “By moving forward with implementing AB 257, the state would create a harmful precedent that would effectively render the state’s referendum process meaningless.”

The goal of the Coalition’s lawsuit is to immediately halt the FAST Act from being enforced, and invalidate any actions taken to enforce the law until Californians can vote on the law in November 2023. 

“The state Constitution guarantees a process for voters to reconsider laws passed by their legislature. The DIR’s disregard for the rule of law is an insult to the democratic process,” Sean Kennedy, the Association’s executive vice president for public affairs, said in a statement. “The National Restaurant Association respects the process set out by the California Constitution, and believes this lawsuit is necessary to protect the faith that voters put into that process when they signed the petitions to put the FAST Act on a ballot.”

Though the lawsuit isn’t directly related to opposing the FAST Act itself—only the early implementation of the law—the Coalition was formed to lobby against AB 257, with major funding from quick-service chains such as McDonald’s, Burger King, Chipotle, Jack in the Box, and Starbucks. 

According to a UC Riverside School of Business study (commissioned by the Coalition), labor costs would inflate by 60 percent and food prices could balloon by 20 percent if minimum wages were set between $22 and $43.

“California, for better or worse, is a bellwether state for progressive policy,” says Jeff Hanscom, IFA’s vice president of state and local government relations and counsel. And as California leads the way, Hanscom expects other progressive cities to follow suit, beyond restaurants into other hospitality industries. “Folks started to realize, it’s not just a fast food or restaurant issue, it’s much larger than that.”


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