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MONEY
Fast Food Industry
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CALIFORNIA'S FAST FOOD BILL PROMPTS VIRGINIA AND NEW YORK COPYCATS, RAISING
STAKES FOR EVERYONE

Medora Lee
USA TODAY


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A California bill that would create a council regulating everything from wages
to working conditions at fast food chains isn’t slated to go to state voters for
a final decision until November 2024. But copycat legislation is already
cropping up elsewhere, setting up a fight over how far unions and politicians
should go to protect workers’ rights and whether workers are even the center of
this battle.

AB 257, or the FAST Act, also known as Fast Food Recovery Act, would give an
appointed 10-member “Fast Food Council,” wide-ranging authority over large
national fast food and fast casual restaurants in California. Its powers would
include the authority to force restaurants to increase the minimum wage to $22
an hour and give annual raises of up to 3.5% after that. It could also set
minimum standards for working conditions, maximum hours worked, security, and
more.   



California Gov. Gavin Newsom signed the bill last September to go into effect on
Jan. 1, 2023, but restaurant group Save Local Restaurants collected a million
signatures to put the bill to a vote next year.

Even if a bill has been signed into law in California, opponents can collect the
requisite number of signatures to put the measure on the ballot and allow voters
to decide the final outcome. California tried to push ahead with the law anyway,
saying it had the authority to continue since all the signatures weren't yet
validated.



Save Local Restaurants immediately filed a lawsuit, arguing that never before
has a law been able to move forward while voter signatures were being validated.
Courts agreed, the law was halted, and signatures were validated. 

But the bill's influence had already been felt outside the state.

Virginia House delegate Irene Shin introduced on Jan. 20 a measure, HB 2478, to
establish a similar policy board within the executive branch of government in
her state. New York state Sen. Jabari Brisport introduced on Jan. 30 a fast food
franchisor accountability act, S3155.



California's FAST Act would "have a significant and long-term impact on the
California restaurant industry, and likely restaurants and other industries in
and outside of California," wrote law firm Greenberg Traurig in an analysis of
the law last September. "Proponents of the legislation have made it clear that
California is a starting point."

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While proponents say the measures will ensure fast-food workers receive living
wages and protections from a hostile workplace, including harassment and
retaliation, opponents say they are simply a power grab by unions to enlarge
their numbers and not a move to protect workers.

“Whether you’re a lawmaker, a business owner or leader, or an everyday voter,
one thing is clear: California has become a dramatic case study of putting bad
politics over good policy,” wrote Joe Erlinger, chief executive of U.S.
McDonald’s, in a letter. 

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WHAT’S AT STAKE FOR WORKERS? 

The law would give workers “a seat at the table to help set wage, health,
safety, training standards across the fast-food industry,” claims the Service
Employees International Union, which represents 2 million U.S. workers in health
care, the public sector and in the property services industry.



Supporters of the bill say the fast-food industry is rife with poor working
conditions, including low pay, few benefits, and frequent violations of
workplace laws.

“There are serious issues within the fast food industry,” said Vincent
Calderone, former chain restaurant owner, and Los Angeles employment attorney
who has a lawsuit against Del Taco for sexual harassment and retaliatory firing.
"They often ignore workplace issues, especially complaints of sexual harassment.
They do not take appropriate measures to stop it or prevent it, and oftentimes
take retaliatory measures against those who report it to discourage others from
complaining about such conduct.” 

Businesses note the industry already has protections with health, safety
and labor regulations, and they're not opposed to more "legislation that leads
to meaningful improvements in our communities, including responsible increases
to the minimum wage," Erlinger said.

Of 67 economists in an August Employment Policies Institute survey, 93% expect
operating costs will rise under the FAST Act, 84% said fewer restaurant chains
would want to operate in California and 73% said franchisees will close
restaurants.  




WHY DO FAST FOOD COMPANIES OBJECT? 

Fast-food companies say they don't object to higher wages or safe working
conditions. Instead, they claim to oppose government overreach at the bidding of
labor unions and the increased costs taxpayers and consumers would pay at
restaurants as a result of the law. 



“Simply put, organized labor hasn’t been successful going through the front door
– giving everyday workers the ability to choose whether they want a union,”
Erlinger of McDonald’s said in his letter. “So it asked for a backdoor – pushing
...lawmakers to introduce, pass and sign a bad policy that hurts small
businesses, workers, and consumers.” 

California’s Department of Finance opposed the bill, saying “it is not clear
that this bill will accomplish its goal.” Enforcing the law would increase
government costs and “could lead to a fragmented regulatory and legal
environment for employers and raise long-term costs across industries.” 

Consumers, already suffering from high inflation, could end up paying as much as
20% more for their food, some economists predict. 

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employees

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instead of a wage, Labor Department says




WHAT’S IN CALIFORNIA’S BUDGET? 

Even though there’s zero chance the FAST Act will become law during California’s
fiscal year 2023-2024, ending June 30, 2024, $4.6 million to hire 19 people to
enforce the FAST Act is included in the proposed budget.  

Some say this is an anomaly, especially since the budget request was made on the
same day a judge issued a temporary restraining order on the law, but the
California department that would implement the law said the funding was included
because signatures on the ballot initiative weren't confirmed until Jan. 24, two
weeks after Newsom released his budget plan.

Regardless, opponents say it’s the first glimpse of what the law, if passed,
could add to government costs. “That’s just a drop in the bucket of what’s
likely to come,” Erlinger said. Millions more dollars were penciled in for
subsequent fiscal years. 

Higher wages:Minimum wage is going up in 23 states as $15 an hour gains steam.
Is your state one of them?



Not working free:83 workers at LA restaurants weren't paid for overtime; owner
must pay $1.6M in back wages, feds say


WHAT HAPPENS NEXT? 

Neither side can predict the outcome of the ballot measure next year, but one
thing is sure: Californians will be flooded with advertisements come the fall of
2024. Greenberg and Traurig estimated more than $200 million would be spent in
this battle.

“This is exactly what the fast food industry was hoping for,” said Calderone,
the former restaurant owner and attorney. “This gives them the time they need to
raise money and start persuading voters to block this law from ever coming into
effect.” 

As for Virginia’s proposed bill, he said, “it’s a copycat of the California law,
and I have no doubt the fast food industry already has it on their radar.” 

Medora Lee is a money, markets and personal finance reporter at USA TODAY. You
can reach her at mjlee@usatoday.com and subscribe to our free Daily Money
newsletter for personal finance tips and business news every Monday through
Friday morning.    







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