A California bill that would create a council regulating everything from wages to working conditions at fast food chains isn’t slated to go to state voters for a final decision until November 2024. But copycat legislation is already cropping up elsewhere, setting up a fight over how far unions and politicians should go to protect workers’ rights and whether workers are even the center of this battle.
AB 257, or the FAST Act, also known as Fast Food Recovery Act, would give an appointed 10-member “Fast Food Council,” wide-ranging authority over large national fast food and fast casual restaurants in California. Its powers would include the authority to force restaurants to increase the minimum wage to $22 an hour and give annual raises of up to 3.5% after that. It could also set minimum standards for working conditions, maximum hours worked, security, and more.
California Gov. Gavin Newsom signed the bill last September to go into effect Jan. 1, 2023, but restaurant group Save Local Restaurants collected a million signatures to put the bill to a vote next year.
Even if a bill has been signed into law in California, opponents can collect the requisite number of signatures to put the measure on the ballot and allow voters to decide the final outcome. California tried to push ahead with the law anyway, saying it had the authority to continue since all the signatures weren’t yet validated.
Save Local Restaurants immediately filed a lawsuit, arguing that never before has a law been able to move forward while voter signatures were being validated. Courts agreed, the law was halted, and signatures were validated.
But the bill’s influence had already been felt outside the state.
Virginia House delegate Irene Shin introduced on Jan. 20 a measure, HB 2478, to establish a similar policy board within the executive branch of government in her state. New York state senator Jabari Brisport introduced on Jan. 30 a fast food franchisor accountability act, S3155.
California’s FAST Act would “have a significant and long-term impact on the California restaurant industry, and likely restaurants and other industries in and outside of California,” wrote law firm Greenberg Traurig in an analysis of the law last September. “Proponents of the legislation have made it clear that California is a starting point.”
While proponents say the measures will ensure fast-food workers receive living wages and protections from a hostile workplace, including harassment and retaliation, opponents say they are simply a power grab by unions to enlarge their numbers and not a move to protect workers.
“Whether you’re a lawmaker, a business owner or leader, or an everyday voter, one thing is clear: California has become a dramatic case study of putting bad politics over good policy,” wrote Joe Erlinger, chief executive of U.S. McDonald’s, in a letter.
What’s at stake for workers?
The law would give workers “a seat at the table to help set wage, health, safety, training standards across the fast-food industry,” claims the Service Employees International Union (SEIU), which represents 2 million U.S. workers in health care, the public sector and in the property services industry.
Supporters of the bill say the fast-food industry is rife with poor working conditions, including low pay, few benefits, and frequent violations of workplace laws.
“There are serious issues within the fast food industry,” said Vincent Calderone, former chain restaurant owner, and Los Angeles employment attorney who currently has a lawsuit against Del Taco for sexual harassment and retaliatory firing. “They often ignore workplace issues, especially complaints of sexual harassment. They do not take appropriate measures to stop it or prevent it, and oftentimes take retaliatory measures against those who report it to discourage others from complaining about such conduct.”
Businesses note the industry already has protections with health, safety and labor regulations, and they’re not opposed to more “legislation that leads to meaningful improvements in our communities, including responsible increases to the minimum wage,” Erlinger said.
Of 67 economists in an August Employment Policies Institute survey, 93% expect operating costs will rise under the FAST Act, 84% said fewer restaurant chains would want to operate in California and 73% said franchisees will close restaurants.
Why do fast food companies object?
Fast-food companies say they don’t object to higher wages or safe working conditions. Instead, they claim to oppose government overreach at the bidding of labor unions and the increased costs taxpayers and consumers would pay at restaurants as a result of the law.
“Simply put, organized labor hasn’t been successful going through the front door – giving everyday workers the ability to choose whether they want a union,” Erlinger of McDonald’s said in his letter. “So it asked for a backdoor – pushing …lawmakers to introduce, pass and sign a bad policy that hurts small businesses, workers, and consumers.”
California’s Department of Finance opposed the bill, saying “it is not clear that this bill will accomplish its goal.” Enforcing the law would increase government costs and “could lead to a fragmented regulatory and legal environment for employers and raise long-term costs across industries.”
Consumers, already suffering from high inflation, could end up paying as much as 20% more for their food, some economists predict.
What’s in California’s budget?
Even though there’s zero chance the FAST Act will become law during California’s fiscal year 2023-2024, ending June 30, 2024, $4.6 million to hire 19 people to enforce the FAST Act is included in the proposed budget.
Some say this is an anomaly, especially since the budget request was made on the same day a judge issued a temporary restraining order on the law, but the California department that would implement the law said the funding was included because signatures on the ballot initiative weren’t confirmed until Jan. 24, two weeks after Newsom released his budget plan.
Regardless, opponents say it’s the first glimpse of what the law, if passed, could add to government costs. “That’s just a drop in the bucket of what’s likely to come,” Erlinger said. Millions more dollars were penciled in for subsequent fiscal years.
What happens next?
Neither side can predict the outcome of the ballot measure next year, but one thing is sure: Californians will be flooded with advertisements come the fall of 2024. Greenberg and Traurig estimated more than $200 million would be spent in this battle.
“This is exactly what the fast food industry was hoping for,” said Calderone, the former restaurant owner and attorney. “This gives them the time they need to raise money and start persuading voters to block this law from ever coming into effect.”
As for Virginia’s proposed bill, he said, “it’s a copycat of the California law, and I have no doubt the fast food industry already has it on their radar.”
Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
Story Credit: usatoday.com