Calif. business groups launch challenge to fast food worker bill

California business groups have mobilized a signature-gathering campaign in hopes of blocking a new law that would create a powerful new council with the authority to set minimum standards — and raise wages — for fast food jobs.

Supporters say the council could improve jobs in an industry that’s notoriously low-paying and hard to unionize.They say it could be a new model for labor-management relations and are hoping other blue states will try something similar next year. 

“Any state could do something like this,” said David Rolf, a former Service Employees International Union leader who now consults with labor groups and nonprofits.

But business groups fiercely oppose the California law, which they say would drive up restaurant menu prices. 

Gov. Gavin Newsom (D) signed the Fast Food Accountability and Standards Recovery Act, or FAST Recovery Act, on Labor Day. Within days the Chamber of Commerce, National Restaurant Association, and International Franchise Association had launched a referendum campaign challenging the law. If the campaign gathers some 623,000 signatures by December 5th, the fast food council would be put on hold until Californians vote in November 2024.

All options are on the table for fighting the FAST Recovery Act, including potential litigation, said Jeff Hanscom, vice president for state and local government relations and counsel for the International Franchise Association, a membership group that advocates for franchisees. 

“From our perspective,” Hanscom said, “the law is not only fundamentally flawed but fundamentally unnecessary.”

Similar legislation hasn’t yet been introduced in other states, Hanscom said, but he’s expecting the idea to spread. “Would I be totally shocked if we didn’t see another FAST Act 2.0 in other states in the future? Absolutely.”

SEIU, which represents some two million workers nationally, backed the new California law. Union members and leaders have said the bill is a key victory in their fight to improve fast-food jobs, because it gives workers a voice in setting job standards.

“California’s fast-food cooks and cashiers are setting an example for workers across the country and blazing a new trail for workers winning more power in their workplaces and in global industries like fast-food,” SEIU International President Mary Kay Henry said in an emailed statement to Pluribus News. 

Under the law, California’s governor and legislative leaders would appoint 10 people to the council, representing fast food workers, employers and state agencies. 10,000 fast food workers must sign a petition to convene the council; after the signatures are verified, the council must start meeting within 90 days. 

The council would be able to set minimum health, safety and employment standards for fast-food chains, those with 100 or more U.S. establishments that share a common brand. The council could raise worker pay up to $22 an hour next year and approve additional increases after that (the statewide minimum wage next year will be $15.50). 

The council cannot require employers to offer new paid time off benefits or predictable schedules. Lawmakers also removed a provision in the initial bill that would have made corporate franchisors liable for workplace health and safety violations at franchisee-owned businesses. 

The law would allow cities with a population of over 200,000 people to set up their own local fast food councils, which could offer recommendations to the statewide council. 

The council model offers an alternative to traditional collective bargaining, advocates for workers say, by bringing worker and employer representatives together to negotiate standards for an entire industry. 

“It’s big, and new, and by far the most important advance of workers rights in decades,” said David Madland, a senior fellow and the senior adviser to the American Worker Project at the left-leaning Center for American Progress. 

Some advocates for workers have concluded that in today’s economy, the old model of organizing one worksite at a time doesn’t help most people, Rolf said. Traditional union membership has also been declining for decades. Only about 10% of workers were union members last year, according to the Bureau of Labor Statistics.  

Some other left-leaning states and cities have in recent years taken steps to convene workers and employers to recommend workplace standards for a given industry, Madland said. Many of those efforts are still in the early stages. None create a group as powerful as the California fast food council.

Seattle leaders in 2018 created a Domestic Workers Standards Board to advise city leaders on standards for domestic workers. Michigan Gov. Gretchen Whitmer (D) last year ordered the formation of a council to advise the state Department of Human Services on supporting nursing home workers. Nevada lawmakers last year created a similar board to recommend policies for supporting home care workers. 

The New York labor department has for decades had the power to convene wage boards to recommend minimum wages for workers in a given industry. The agency in 2015 accepted a wage board’s recommendation to raise the minimum wage for fast food workers to $15 an hour. 

New York lawmakers in 2019 required the agency to form a wage board to consider the overtime threshold for farm laborers. The agency last month approved the board’s recommendation to lower the threshold from 60 to 40 hours a week over the next decade.

The SEIU and business groups together spent at least $1 million lobbying legislators on the FAST Recovery Act this legislative session, according to a Pluribus News review of lobbying reports filed with the California Secretary of State’s office. 

The SEIU spent about half a million dollars lobbying for the bill in 2022, plus about $476,000 lobbying for the FAST Recovery Act and an unrelated banking bill in 2021. McDonalds, Wendy’s and other employers spent at least $665,000 this session lobbying against the FAST Recovery Act. 

Now both sides are gearing up for a potentially expensive referendum campaign. And Rolf noted the ballot fight does not have to be a one-sided battle.

“It wouldn’t be surprising if the labor movement counter-gathered signatures for a different ballot measure,” he said.