Chipotle, Starbucks and major chains are spending millions to stop the landmark state workers law

New York

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

Chipotle, Starbucks, Chick-fil-A, McDonald’s, In-N-Out Burger, and owner of KFC Yum! The brands each donated $1 million to save local restaurants, a coalition opposed to the law. Major fast food companies, business groups, franchisees, and many small restaurants have also criticized the legislation, spending millions of dollars opposing it.

The measure, known as the FAST Act, was signed into law last year by California Gov. Gavin Newsom and was set to go into effect January 1. For voting quality in the 2024 state general election.

Supporters and detractors of the measure have argued that the closely watched initiative could transform the fast food industry in California and serve as a forerunner for similar policies in other parts of the country.

The law is the first of its kind in the United States, and authorized the formation of a 10-member fast food board made up of workers, employers, and government representatives to oversee standards for workers in the state’s fast food industry.

The board had the authority to set sector-wide minimum standards for wages, health and safety protections, leave policies, and avenues for worker retaliation at fast-food restaurants in more than 100 locations nationwide.

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, that minimum will rise annually based on inflation.

The California fast food industry employs more than 550,000 workers. Nearly 80% of people of color and about 65% of women are women, according to the Service Employees International Union, which supported the law and the movement for $15.

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

Employment law in the United States centers around unions organizing and negotiating in a single store or factory. This makes it almost 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 workers and employers negotiate wages and standards across an entire industry.

Opponents of the law say it is a drastic measure that will have harmful effects. It unfairly targets the fast food industry and will increase prices and force companies to lay off workers, they argue, citing an analysis by economists at UC Riverside that found that if restaurant worker compensation increased by 20%, restaurant prices would rise by about 7%. . The study also found that if restaurant workers’ compensation increased by 60%, prices for limited-service restaurants would increase by up to 22%.

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

Opponents have resorted to a similar strategy used by Uber, Lyft and gig companies that have sought to overturn a 2020 California law that would have required them to reclassify drivers as employees rather than “independent contractors,” providing them with benefits such as minimum wage, overtime and paid sick leave.

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