California voters will decide next year on a referendum that could overturn a groundbreaking new state law that sets working conditions and minimum wages of up to $22 an hour for fast food workers in the nation’s largest state.
Chipotle, Starbucks, Chick-fil-A, McDonald’s, In-N-Out Burger and KFC owner Yum! Brands donated $1 million each to Save Local Restaurants, an anti-law coalition. Other leading fast food companies, corporate groups, franchise owners and many small restaurants have also criticized the legislation and spent millions of dollars opposing it.
The measure, known as the FAST Act, was signed into law last year by California Governor Gavin Newsom and was set to go into effect on January 1. On Tuesday, California’s secretary of state announced that enough signatures had been collected on a petition to halt implementation of the law to vote for a vote on the state’s 2024 general election ballot.
The closely watched initiative could transform California’s fast food industry and serve as a benchmark for similar policies in other parts of the country, proponents and critics of the measure argued.
The law is the first of its kind in the United States and authorized the creation of a 10-member Fast Food Council, made up of employee, employer and government representatives, to oversee standards for workers in the fast food industry of the state.
The council had the authority to set industry-wide minimum standards for wages, health and safety protections, furlough policies and retaliatory measures for employees at fast food restaurants with more than 100 locations nationally.
The municipality could raise the minimum wage in the fast food industry to $22 an hour, versus a $15.50 minimum for the rest of the state. From there, that minimum would increase annually based on inflation.
California’s fast food industry employs more than 550,000 people. Nearly 80% are of color and about 65% are women, according to the Service Employees International Union, which supports the law and the Fight for $15 movement.
Proponents of the law, including trade unions and labor unions, see this as a pioneering model for improving wages and conditions for fast-food workers and overcoming obstacles to unite workers in the industry. They argue that success in California could lead other labor-friendly cities and states to adopt similar boards regulating fast food and other service businesses. Less than 4% of restaurant workers nationwide are unionized.
Labor law in the United States is structured around unions that organize and negotiate in an individual shop or factory. This makes it almost impossible to organize workers at fast food chains and retail chains with thousands of stores.
The California law would move the state closer to industry-wide bargaining, a form of collective bargaining in which workers and employers negotiate wages and standards across an industry.
Opponents of the law speak of a radical measure that would have harmful consequences. They claim it is unfairly targeting the fast food industry and will raise prices and force companies to lay off employees, citing an analysis by UC Riverside economists that found that if restaurant worker compensation increased by 20%, the restaurant prices would increase by about 7%. . If restaurant worker compensation increased by 60%, prices at limited-service restaurants would increase by as much as 22%, the study also found.
“This law creates a food tax on consumers, kills jobs and pushes restaurants out of local communities,” the Save Local Restaurants coalition said.
On Wednesday, McDonald’s President Joe Erlinger denounced the law as one driven by struggling unions that would create “an unelected council of political insiders, not local business owners and their teams,” who make key business decisions.
Opponents have turned to a similar strategy used by Uber, Lyft, and gig companies that sought to overturn a 2020 California law that would require them to reclassify drivers as employees, not “independent contractors,” meaning would offer them benefits such as minimum wage, overtime and paid sick leave.
In 2020, Uber, Lyft, DoorDash, Instacart and others spent more than $200 million to successfully convince California voters to pass Proposition 22, a ballot measure that exempted the companies from reclassifying their employees as employees.