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The fight is on as California's fast food law goes before the voters

The Fast Act is now officially on hold until a 2024 referendum is held. But the war is on to capture the public's sympathies. And in the middle of it is McDonald's U.S. president.
California's fast food wage law
The restaurant industry's largest union says it's ready for battle. / Photograph: Shutterstock

California officials verified Wednesday that opponents of the state’s controversial new fast-food wage law have collected the signatures needed to put the measure to a yes/no vote in the state’s 2024 general election, ensuring the measure remains on hold until then.

The validation also virtually guarantees a fierce firefight between the restaurant industry and organized labor during the 22 months leading up to the November referendum. The battle commenced as soon as the state announced that voters would have the chance to decide if the law, officially designated A.B. 257 but popularly known as the Fast Act, should be allowed to take effect.

“Economists estimated A.B. 257 would drive up the price of eating at a quick service restaurant in California by 20% at a time when people can least afford it,” McDonald’s USA President Joe Erlinger said in a post on the burger giant’s website. He noted that even the California Department of Finance has said the law will not help workers and will inflict considerable pain on consumers.

His comments followed a statement to the media from Mary Kay Henry, president of the Service Employees International Union (SEIU), that read, “McDonald’s, Starbucks, Chipotle and other fast-food corporations think they can buy their way out of anything, but California voters are about to teach them an expensive lesson: No corporation is more powerful than half a million workers joining together to demand a seat at the table.”

The statement quoted California McDonald’s worker Angelica Hernandez as vowing, “We are going to win again…we will not back down.”

The SEIU in particular has championed the Fast Act as a way of giving fast-food workers a loud say on what they’re paid.

The act shifts the power for setting fast-food wages from the state legislature to a 10-person Fast Food Council, a setup virtually unknown in the United States. Four of the seats will be held by fast-food workers and union representatives, and another four are reserved for employers.  All will be appointed by the governor.

The Council’s decisions would be binding on any fast-food restaurant in California that’s part of a chain with at least 100 units nationwide.

If the petition driven by Fast Act opponents had fallen short of state requirements, or if a big portion of the 1.1 million signatures had been rejected by election officials as invalid, California units of big fast-food chains could have seen wages soar to $22 per hour this year alone.

The roughly 50% increase in fast-food pay is also expected to drive up the wages full-service restaurants have to offer in the competition for workers.

“The Fast Act is bad policy that threatens not only quick-service restaurants, but the independents operating in the same neighborhoods,” Sean Kennedy, EVP of public policy for the National Restaurant Association, said in a statement. “There is no way that the regulations passed by this unelected council would not damage the state’s restaurant industry, harm its workforce, and leave diners paying the bill.”

The Fast Act was signed into law by Gov. Gavin Newsom on Labor Day after fierce lobbying of state lawmakers by the SEIU. In a flash, the International Franchise Association and the National Restaurant Association formed an alliance to put the measure to a referendum vote. They were quickly joined by the U.S. Chamber of Commerce, and the Save Local Restaurants alliance started gathering the roughly 670,000 signatures needed to put a possible recall on the 2024 ballot.

The group collected more than 1 million signatures to provide a cushion should some signatures be rejected by regulators.

The petition was submitted to the state in early December. Under California’s constitution, a law being put to a referendum vote is suspended until the voting takes place and the ballots are counted. But California declared right after Christmas that the act would take effect on Jan. 1, since the petition signatures had not been validated and counted.

Save Local Restaurants filed a lawsuit challenging that decision. The California Superior Court of Sacramento found for the alliance, putting the Fast Act on hold until the signatures could be verified as legitimate. Tuesday’s decision by election officials essentially extended the suspension until Nov. 2024.

Erlinger’s letter ticked through the industry’s arguments against the Fast Act:

It wrests the power to set wages away from elected officials and employers, he argued.

It supposedly addresses rampant wage theft within franchised quick-service restaurants, when in fact the incidence is five times lower than the rate for all of businesses, according to government figures.

It’s been characterized as an economic detriment by experts ranging from The Wall Street Journal to several California governmental agencies.

It will worsen the current inflationary trend.

Labor groups have countered that wage theft and other employer abuses are rampant in the quick-service sector and that Black and brown employees in particular deserve a seat at the table when such crucial matters as wage rates and working conditions are being discussed.

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