The US state of California passed a bill, the Fast Act, which will see the creation of a government panel which will decide the wages for the state’s more than 500,000 fast food workers.
This is the first time in the history of workplace regulation in the US that such a bill is being introduced. Labour Unions are also hoping that other states of the US adopt a similar model.
Under the Fast Act, the hourly wages will go up to $22 for fast food workers starting 2023 and will be increased annually by the same rate as the consumer-price index (CPI) to a maximum of 3.5%, the Wall Street Journal reported.
The Wall Street Journal in its report said that if the act is signed into law by California governor Gavin Newsom, then the governor and legislative leader will form a panel of workers, union representatives, employers and business advocates who would set the wages.
Representatives for companies including McDonald’s Corp., Yum Brands Inc. and Chipotle Mexican Grill Inc. opposed the bill. They also managed to remove provisions which allowed the council to oversee workplace conditions. If the provisions remained then the restaurant chains would become joint employers along with the franchise. This would make them liable to labour violations.
Democrats and Republicans were divided over the bill. The Democrats control the state Legislature and in the Senate and the House, every Democrat voted yes to the bill while every Republican who voted opposed the bill.
California lawmakers who introduced the bill last year said they did so to protect the interests of Black or Latino workers, who are a major part of the fast food workforce.
One lawmaker, Lorena Gonzalez Fletcher, a former Democrat, told the Wall Street Journal that if it turned into a law then California would have a a labour model like that in Europe where unions negotiate for wages and work conditions in an entire sector instead of companies.
Meanwhile, fast food industry bigwigs spent millions of dollars in advocating against the Fast Act. Chipotle, Yum Brands, Chick-fil-A Inc., In-N-Out Burgers, Jack in the Box Inc., and Burger King parent Restaurant Brands International Inc. spent more than $1 million to lobby lawmakers in the past one year.
The International Franchise Association also spent $615,000 lobbying against the Fast Act.
McDonald’s even wrote to franchise owners in California to send emails to their lawmakers to vote against the Fast Act, the Wall Street Journal said citing people familiar with the matter.
Citing people mentioned above, the WSJ report said that McDonald’s told Republican lawmaker Shannon Grove that if the bill becomes a law then they would stop expanding in California or leave.
The state of California accounts for 14% of total US restaurant sales. The law would impact the sector at a time when food and labour costs are worrying companies.
The new rule applies to fast food restaurants that are part of a chain. It also is applicable to restaurants which have limited or no table service and also to restaurants where customers order their food and pay before eating. It applies to chain restaurants which have 100 or more locations nationally.
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