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

New York

California voters will decide in a referendum next year whether to repeal a landmark new state law that set minimum wages and working conditions 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! The brands each donated $1 million to Save Local Restaurants, a coalition opposing the law. Other top fast-food companies, business groups, franchise owners and many small restaurants also criticized the legislation and spent millions of dollars opposing it.

The measure, known as the FAST Act, was signed into law by California Governor Gavin Newsom last year and will go into effect on January 1. to qualify for the state’s 2024 general election ballot.

The closely watched initiative could transform the fast-food industry in California and create clamor for similar policies in other parts of the country, supporters and critics of the measure argue.

The law, a first in the United States, authorizes the creation of a 10-member Fast Food Council made up of labor, employer and government representatives to oversee standards for workers in the state’s fast-food industry.

The board was empowered to set industry-wide minimum standards for wages, health and safety protections, layoff policies, and employee responses at fast-food restaurants with more than 100 locations nationally.

The council could raise the minimum wage in the fast-food industry to $22 an hour, compared to the $15.50 minimum for the rest of the state. From there, this minimum will increase annually based on inflation.

California’s fast-food industry employs more than 550,000 people. About 80% are people of color and about 65% are women, according to the Service Employees International Union, which supports the law and the Fight for $15 movement.

Supporters of the law, including unions and labor groups, see it as a breakthrough model for improving wages and conditions for fast-food workers and removing barriers to unionization in the industry. They argue that success in California could lead other labor-friendly cities and states to adopt similar boards to regulate fast-food and other service industries. Nationwide, less than 4% of restaurant workers are unionized.

Labor law in the United States is structured around unions that organize and bargain in individual shops or factories. 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 sectoral bargaining, a form of collective bargaining in which labor and employers negotiate wages and standards across an industry.

Opponents of the law say it is a radical measure with harmful effects. They argue that this unfairly targets the fast-food industry and would raise prices and force businesses to lay off workers, citing an analysis by economists at UC Riverside that found a 20% increase in restaurant workers’ compensation would increase restaurant prices by about 7%. . If restaurant worker compensation increases by 60%, prices at limited-service restaurants will increase by up to 22%, the study also found.

“This law creates a grocery tax on consumers, kills jobs and drives restaurants out of local communities,” said the Save Local Restaurants coalition.

Joe Erlinger, McDonald’s US president, on Wednesday described the law as being driven by embattled unions that would lead to “an unelected board of political insiders, not local business owners and their teams” making key business decisions.

Opponents have resorted to a similar strategy of trying to overturn a 2020 California law used by Uber, Lyft and gig companies that would have required drivers to be classified as employees rather than “independent contractors,” giving them benefits like concessions. 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 exempts companies from classifying their workers as employees.

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