Fast food companies in California, US, have signed an agreement with the labour union Service Employees International Union (SEIU).

According to a report by the New York Times, the agreement will allow industry workers to receive a minimum wage of $20 per hour.

The agreement is expected to result in changes to Assembly Bill 1228 and increase the minimum wage for most fast food workers in California.

Kqed.org reported that the raise will apply to workers at fast food chains with at least 60 sites in the country.

It will not apply to restaurants that sell bread as a stand-alone menu item or operate a bakery.

Furthermore, a council will be set up with the power to raise the wages for the workers annually through 2029.

International Franchise Association president and CEO Matt Haller said: “This agreement is in the best interest of workers, local franchise restaurant owners and brands and protects the franchise business model that has provided opportunities for thousands of Californians to become small business owners.”

In exchange, labour groups and their allies in the Legislature will agree to remove the joint liability portion of Assembly Bill 1228. It could have made restaurants liable for potential breaches at the workplace committed by their franchisees.

This agreement puts an end to the standoff between the fast food industry and labour unions triggered in 2022 following the signing of a law by Democratic Governor Gavin Newsom, creating a Fast Food Council.

The council had the authority to increase wages by up to $22 per hour for the fast food workers.

However, the council will now hold the authority only to set wages. It does not hold the authority to set standards for the workplace.

The new bill is subject to approval by the Democratic-controlled state Legislature and will be signed into law by California Gavin Newsom.