Restaurants and Unions Agree to Raise Pay to $20 an Hour in California

Labor groups and fast-food companies in California reached an agreement over the weekend that will pave the way for workers in the industry to receive a minimum wage of $20 per hour.

The deal, which will result in changes to Assembly Bill 1228, was announced by the Service Employees International Union on Monday, and will mean an increase to the minimum wage for California fast-food workers by April. In exchange, labor groups and their allies in the Legislature will agree to the fast-food industry’s demands to remove a provision from the bill that could have made restaurant companies liable for workplace violations committed by their franchisees.

The agreement is contingent on the withdrawal of a referendum proposal by restaurant companies in California that would have challenged the proposed legislation in the 2024 ballot. Businesses, labor groups and others have often used ballot measures in California to block legislation or advance their causes. The proposed legislation would also create a council for overseeing future increases to the minimum wage and enact workplace regulations.

“With these important changes, A.B. 1228 clears the path for us to start making much-needed improvements to the policies that affect our workplaces and the lives of more than half a million fast-food workers in our state,” Ingrid Vilorio, a fast-food worker and union member, said in a statement released by the S.E.I.U.

Sean Kennedy, executive vice president of public affairs at the National Restaurant Association, said the deal also benefited restaurants. “This agreement protects local restaurant owners from significant threats that would have made it difficult to continue to operate in California,” he said. “It provides a more predictable and stable future for restaurants, workers and consumers.”

Last year, the California Legislature passed Assembly Bill 257, which would have created a council with the authority to raise the minimum wage to $22 per hour for restaurant workers. Gov. Gavin Newsom signed it on Labor Day last year.

But the bill met fierce opposition from business interests and restaurant companies, and a petition received enough signatures to put a measure on the November 2024 ballot to stop the law from going into effect.

Other business groups in California have successfully used that tactic to change or reverse legislation they opposed.

In 2020, ride-sharing and delivery companies like Uber and Instacart campaigned for and received an exemption from a key provision of Assembly Bill 5, which was signed by Mr. Newsom and would have made it much harder for the companies to classify drivers as independent contractors rather than employees.

Those companies collected enough signatures to get the issue on the ballot as Proposition 22, which passed in November 2020. More than $200 million was spent on that measure, making it the costliest ballot initiative in the state at the time.

And in February, oil companies received enough signatures for a measure that aims to block legislation banning new drilling projects near homes and schools. That initiative will be on the 2024 ballot.

In response to calls from advocacy groups who have said the referendum process unfairly benefits wealthy special-interest groups, and in an effort to demystify a system that many Californians say is confusing, Mr. Newsom signed legislation on Sept. 8 that aims to simplify the referendum process.