McDonald’s, In-N-Out and Chipotle are spending millions to block pay rises for their workers

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California voters will decide on a referendum next year that could overturn a landmark new federal law that sets working conditions and minimum wages of up to $22 an hour for fast-food workers in the country’s largest state.

Chipotle, Starbucks, Chick-fil-A, McDonald’s, In-N-Out Burger and KFC owner Yum! Brands each donated $1 million to Save Local Restaurants, a coalition opposed to the law. Other top fast food companies, business groups, franchisees 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 by California Gov. Gavin Newsom last year and was scheduled to go into effect on January 1. On Tuesday, California’s Secretary of State announced that a petition to halt implementation of the law had garnered enough signatures to qualify for a vote in the state’s 2024 general election.

The closely watched initiative could transform the fast-food industry in California and serve as a precursor for similar measures elsewhere in the country, supporters and critics of the measure argued.

The law, the first of its kind in the United States, authorized the formation of a 10-member Fast Food Council composed of employee, employer and government representatives to set standards for workers in the fast food industry in the United States to monitor state.

The council had the power to set industry-wide minimum standards for wages, health and safety protections, time off rules and retaliation for workers at fast-food restaurants with more than 100 locations across the country.

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The council could raise the minimum wage in the fast-food industry to as much as $22 an hour, up from a $15.50 minimum wage 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 workers. According to the Service Employees International Union, which sponsored the law and the Fight for $15 movement, nearly 80% are black and about 65% are women.

Supporters of the law, including unions and labor groups, see it as a groundbreaking model for improving wages and working conditions for fast-food workers and overcoming barriers to unionizing workers in the industry. They argue that California’s success could prompt other work-friendly cities and states to introduce similar councils that regulate fast-food and other service industries. Less than 4% of restaurant workers nationwide are unionized.

Labor law in the United States is structured around unions, which organize and bargain within a single business or plant. This makes it nearly impossible to organize workers in fast food and retail chains with thousands of stores.

The California law would bring the state closer to industry bargaining, a form of collective bargaining in which workers and employers negotiate wages and standards for an entire industry.

Opponents of the law speak of a radical measure with harmful effects. They argue that it will unfairly target the fast-food industry and will raise prices and force companies to lay off workers, citing an analysis by UC Riverside economists that found restaurant prices will rise by about 7% would be if restaurant employee compensation increased by 20%. . If restaurant employee compensation increased by 60%, prices for limited-service restaurants would increase by as much as 22%, the study found.

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“This law creates a food tax for consumers, destroys jobs and pushes restaurants out of local communities,” the Save Local Restaurants coalition said.

On Wednesday, McDonald’s US President Joe Erlinger branded the law as a struggling union-driven law that would result in “an unelected council of political insiders, non-local business owners and their teams” making key business decisions .

Opponents have turned to a similar strategy employed by Uber, Lyft and gig companies seeking to repeal a 2020 California law that would have required them to classify drivers as employees rather than “independent contractors,” to their advantage such as a minimum wage, overtime, and paid sick leave.

In 2020, Uber, Lyft, DoorDash, Instacart, and others spent more than $200 million successfully persuading California voters to pass Proposition 22, a voting measure that exempted companies from reclassifying their workers as employees .

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