Gov. Gavin Newsom on Thursday signed a sweeping deal that his office helped forge between fast-food companies and unions that will give industry workers a raise next year.

The legislation represents a rare peace deal, brokered during negotiations last summer, allowing companies and unions to avoid a costly statewide election battle over wages.

“I can assure you this was not easy,” said Newsom, who signed Assembly Bill 1228 surrounded by ecstatic union workers in Los Angeles. “That was a tectonic plate that had to be moved.”

In addition to the complex political aspects involved, the deal offers a range of benefits for workers and some important concessions for employers, which will start next year.

Here’s what you need to know about the agreement:

What will the new law mean for employees?

The law that Newsom signed Thursday provides several benefits for employees, including:

A pay increase to $20 an hour on April 1, which applies to California workers employed by a fast-food chain with more than 60 locations across the country. California’s minimum wage is currently $15.50 for all employees. Statewide, the increase is estimated to affect more than 500,000 workers. The possibility of annual wage increases from January 1, 2025 of 3.5% or an amount based on the average changes in the consumer price index per year, whichever is lower. A council of worker and employer representatives will work with state agencies to determine whether future increases should be implemented and whether the bumps will apply to fast-food workers statewide or in specific regions. In addition to wages, the council may also work with government agencies to recommend minimum standards for employee hours and other working conditions. As part of the larger deal, the Service Employees International Union California is avoiding a fight over ballots that would have cost millions of dollars and could instead push union workers to knock on doors and make calls in support of other labor priorities in 2024. How is this coming? different from the previous fast food law signed last year?

Unions successfully pushed Assembly Bill 257, also known as the Fast Food Accountability and Standards Recovery Act, through the state legislature last year.

The original fast food law, which Newsom signed last September, created a 10-member statewide fast food council and regional councils, made up of worker and employer representatives, charged with setting minimum wages, hours and working conditions standards in California.

Under the law, the city could have raised the minimum wage to $22 per hour by 2024 for employees of chains with more than 100 restaurants.

Fast food companies quickly launched a successful campaign to qualify a referendum on the vote to overturn AB 257, halting the law’s enactment until a statewide vote in November 2024.

Below the

new

agreement reached between fast food companies and workers, the referendum will be removed from the ballot and the new law, AB 1228, will override last year’s AB 257.

What did fast food companies get out of the deal?

Under the latest five-year peace deal, which expires in 2029, fast-food companies have won some concessions and averted several potential burdens that unions created as an incentive to convince companies to come to the table and negotiate. These include:

The unions agreed to suspend efforts to pass a law that would make fast-food franchisors legally liable for labor violations committed by franchisees, which could have increased legal costs and fines for companies. Local governments will not be able to force fast food companies to raise wages for workers regionally above state-approved wages. Labor had convinced state lawmakers and the governor to revive the defunct Industrial Welfare Commission under the state budget earlier this year. The commission would have had more authority to raise wages indefinitely and set workplace conditions for fast food and other California industries. The commission served as an insurance policy for unions if the fast-food industry referendum on AB 257 were to pass and the original fast-food council was dissolved. Lawmakers agreed to disband the IWC as part of the deal. Fast food companies are also saving millions of dollars by calling off the referendum fight over AB 257. Who will be on the new council?

The new Fast Food Council, which is similar to the original council created under AB 257, will consist of nine voting members:

Two representatives of the fast food restaurant industry Two franchisees or restaurant owners Two restaurant employees Two advocates for fast food restaurant employees. One member of the public not affiliated with either party who will act as chairman.

The council will also consist of two non-voting members from the Department of Industrial Relations and the Governor’s Office of Business and Economic Development.