Just days after California Gov. Gavin Newsom signed the FAST Recovery Act into law in September, a group launched its effort to put the issue before voters and this week the Save Local Restaurants coalition announced it gathered enough signatures to place a referendum on the November 2024 ballot.
The law would create a government-appointed 10-person council to set wages as high as $22 an hour at fast-food chains with more than 100 units nationwide. California’s minimum wage is $15 and will move to $15.50 in 2023. The council, which would include fast-food workers, franchisees, workers’ rights advocates and others, would also set working conditions and address alleged worker abuses.
If the California Secretary of State verifies the petition signatures, which could take weeks, implementation of the law would be suspended.
The Save Local Restaurants coalition, which includes the International Franchise Association, National Restaurant Association and U.S. Chamber of Commerce, needed to submit some 623,000 California voter signatures. The group said December 5 it submitted more than 1 million.
Matt Haller, president and CEO of the IFA, in a statement called the FAST Act “one of the single most damaging pieces of legislation for local restaurants and California consumers,” and said the “quick-service industry is being singled out by special interests.”
Also known as the Fast-food Accountability and Standards Recovery Act or AB 257, the legislation was pushed hard by the Service Employees International Union, which said fast food workers in the state face low wages, wage theft and unsafe working conditions.
“They created a narrative that was inaccurate with how we run our businesses,” said SG Ellison, speaking in November on a panel at the Restaurant Finance & Development Conference, and “that narrative stuck.” Ellison is president of Diversified Restaurant Group, a franchisee with 330 units across Taco Bell and Arby’s and with a sizable presence in California.
Ellison went on to call the legislation a “gateway” to unionization, which is already hitting chains such as Starbucks and Chipotle, and said DRG is responding by sending its human resources teams into restaurants to educate employees and train managers to understand potential unionization activity.
Mary Kay Henry, president of the SEIU, said in a statement the proposed referendum is “nothing more than a thinly veiled attempt to silence more than half a million fast-food workers in California and intimidate workers everywhere from demanding a seat at the table.”
“This isn’t how companies act when they’re proud of their business model,” Henry said. “It’s how they act when they’re terrified of their own workers and the power of collective action.”
In a statement, Sandro Flores, a Los Angeles-based Carl’s Jr. employee and leader in the Fight for $15 organization, called out “global, billion-dollar corporations” including McDonald’s and Burger King, that are spending “hundreds of millions of dollars to prevent us from having a voice on the job.”
The IFA, meanwhile, also pointed to analysis by the UC Riverside Center for Economic Forecast and Development that shows prices at quick-service restaurants will increase up to 20 percent with passage of AB 257.
In total, 176 fast-food brands have more than 100 units nationwide; the new law applies to 148 chains with units in California, according to research by franchise advisory firm Frandata. Those 148 have 16,753 franchised locations in California operated by 5,820 different franchisees. The top five are Subway, with 2,098 units in California as of year-end 2021. McDonald’s has 1,158; Taco Bell has 839; Jack in the Box has 836 and Carl’s Jr. has 628, according to Frandata.