California Legislature Resurrecting Industrial Welfare Commission in End Run to Fast Act Referendum

Assembly Bill 257 (or the “Fast Act”) was signed into law establishing new and unworkable requirements for quick-serve restaurants.  Then, a million California voters, through their petition signatures, said that all Californians should have the final say on this legislation through a referendum on the 2024 ballot.  Now, through a last-minute budget maneuver, the Legislature has done an end-run on this 2024 referendum, by resurrecting the Industrial Welfare Commission which has been defunded for nearly 20-years to enact similar requirements through new industry-specific wage orders.

According to the Associated Press, the legislature “may have found a way around” the Fast Act ballot question by reviving the Industrial Welfare Commission, apparently to pursue an AB 257 framework before the voters have a chance to decide.  Worse, the scope of the IWC’s new statutory focus is not limited to the counter-service restaurants subject to AB 257; rather it applies broadly to employers with entry level, seasonal and part-time work forces.

Neither the legislature, the Governor, nor the voters who signed referendum petitions intended to see AB 257 applied broadly across multiple sectors of the economy. The budget action to revive the IWC opens the door to expansion of AB 257 to our entire respective industries, through a Governor- appointed commission.  The undersigned organizations oppose expanding an experimental Fast Act-like regulatory regime to other industries.  Worse, we fear the harm caused by these actions to hundreds of thousands of small businesses will be compounded by the near certain expansion of predatory PAGA lawsuits brought under the new IWC wage orders.