Looking to block California’s historic decision to give fast-food workers significant input on their own pay and working conditions, quick-service franchisors and other opponents have filed the paperwork to let voters decide if they’d be okay with the impact.
The move opens the door to putting a proposal on an upcoming ballot to delay or stop adoption of the Fast Act, technically known as AB 257. Essentially, voters would be asked to indicate if they wanted a law that could raise food prices.
The strategy was used successfully by Uber, Lyft and other on-demand car and delivery services in 2020 to thwart legislation requiring their independent drivers be reclassified as employees. Through a ballot initiative called Proposition 22, Californians voted to exempt drivers who rely on an app for assignments, essentially keeping the services’ business model intact. Most analyses concluded that consumers were wary of driving up the price of services that were in particular demand because of the pandemic.
The attempt to enlist voters in overturning the Fast Act drew an immediate and spirited response from advocates of the legislation. In a press briefing Wednesday, labor groups warned McDonald’s and Burger King by name that the same forces that pushed the Fast Act through the state legislature and under Gov. Gavin Newsom’s pen were locked and loaded to counter the chains’ efforts to kill or weaken the measure.
“We are not going back,” said Mary Kay Henry, president of the Service Employees International Union, the hospitality industry’s largest group and the nation’s second largest next to the Teamsters. “We’re prepared to fight.”
The Fast Act marks a historic victory for the SEIU, the key force behind the measure. The legislation provides workers within the California units of big fast-food chains with significant input on their pay, hours and working conditions. It sets up a council that will review wages and working conditions twice a year and adjust wages annually.
Next year, for instance, the Fast Food Council can raise the minimum wage statewide for fast-food workers to $22 an hour, from the current state-mandated level of $14.
The SEIU and affiliated worker advocacy groups have not hidden their intentions to export the first-of-its-kind legislation and its new wage-setting model to other states and jurisdictions.
“The supporters of this bill have made their intentions clear, that California is the test market,” said Sean Kennedy, EVP of public policy for the National Restaurant Association.
In a policy paper issued after Gov. Newsom signed the bill into law, the association stated that Oregon, New York, Illinois and Washington could be the next battlegrounds.
A proposal to set up a council similar to the Fast Act’s Fast Food Council was aired in Michigan but did not progress.
SEIU and its allies are not crying wolf in asserting that restaurant employers and their advocates are ready to explore any route that could lead to the Fast Act’s demise or adjustment.
“We’re all playing with live ammunition right now, and we’re regarding this bill as a huge challenge for operators,” Kennedy said.
“What steps are available, what recourse do we have?” he continued. “Are there court challenges? Sure. And we’re looking at that. Should there be an effort to treat this as a referendum or a ballot initiative? We’re open to anything.”
The association and allies such as the International Franchise Association have warned that the Act will light a rocket under menu prices, a potentially lethal effect at a time of historically high inflation. Customers will balk, and restaurants won’t be able to cover their escalating labor costs.
The IFA says the measure is actually an employer tax that could drive up menu prices by as much as 20%.
There have also been warnings that employers will cut jobs to keep their labor costs in check.
The opponents note that even Newsom’s own administration has blasted the bill because of its likely effects on costs and jobs.
It’s not definite that a proposal to temper or kill the Fast Act will make it to the November ballot. A number of hurdles would have to be cleared, and time is short.
“We’re not counting on it qualifying for a ballot, but we’re prepared to fight,” the SEIU’s Henry said during Wednesday’s press conference.
She was joined at the event by representatives of advocacy groups for California workers, people of color, women in the workforce and the economically disadvantaged.
They indicated what counterargument they would make to the public—to fast-food chains’ customers-- if restaurant franchisors dig deep in their pockets to counter the Fast Act.
Those well-known brands “would rather pay money to stop wages and benefits than to spend money on wages and benefits,” said Rev. William Barber, the well-known leader of the Poor People’s Campaign social justice group.
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