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A Calif. law that takes wage-setting power from fast-food bosses sparks fight

The law stands out at a time when efforts abound nationally to strengthen workers’ rights

Fast-food workers and their supporters march past the California state Capitol in Sacramento in August. (Rich Pedroncelli/AP)

LOS ANGELES — A first-of-its-kind California law that gives an unelected council unprecedented power over wages and working conditions at fast-food restaurants is sparking a furious backlash, with wealthy business and restaurant groups taking on the state’s influential labor unions in an effort to overturn it.

Unions are preparing to fight back, calling the new law the most significant win for organized labor in a generation and vowing to do whatever it takes to protect it. “It’s a watershed moment in the history of the labor movement,” said Mary Kay Henry, president of the Service Employees International Union.

But the measure has drawn intense blowback from national business groups including the U.S. Chamber of Commerce, which want the law overturned. The groups have watched warily as California has enacted a raft of worker protections in recent years, setting itself up as a national model. Opponents and outside experts are already predicting that other Democratic-controlled states might try to follow California’s lead with the fast-food panel, adding fuel to the intensifying battle nationally over worker rights.

“We are seeing a tremendous wave of worker organizing efforts across the country and this is another way I think that workers can raise their voices and be directly involved in raising standards in industry,” said Christina Chung, executive director of the Center for Law and Work at the University of California at Berkeley School of Law. “It’s really exciting, and I think other states will follow suit.”

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The California measure would effectively upend the power structure between workers and their bosses, allowing wages to be set by a 10-member council made up of fast-food workers, restaurant owners and others, most of them selected by the governor. The council would be empowered to enact sweeping changes, including hiking California’s $15-an-hour minimum wage to as high as $22 an hour for hundreds of thousands of mostly nonunion workers across the state.

Although Gov. Gavin Newsom (D) already signed the legislation, the law will be put on hold if opponents gather enough signatures — as expected — to get a proposition overturning it on the 2024 ballot.

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The developments come as the pandemic, coupled with inflation, has forced workers, employers and policymakers to rethink the employment landscape around the nation in multiple ways. Along with some other states, California also passed a far-reaching wage transparency law that will take effect next year and require employers to include pay ranges in job listings, and also — for companies with 100 or more workers — report median salaries by race and gender. The fast-food legislation might be California’s most pathbreaking step to date.

At the same time, Congress has not passed unions’ top priority legislation — a bill called the Pro Act that would protect union organizing — and with Republicans appearing poised to take back control of the House, the door will probably slam shut on Capitol Hill for any labor-friendly bill for at least the next two years. That means unions have nowhere to look but friendly state legislatures or local governments if they want to advance their agenda.

The council created by the Fast Food Accountability and Standards Recovery Act, or Fast Recovery Act, which Newsom signed on Labor Day, would be empowered to make new rules about wages, working conditions, safety standards and other issues at the thousands of fast-food restaurants in California. The council would include representation from business groups and restaurant owners, as well as unions and individual workers. But because all members would be appointed by the governor or Democratic legislative leaders, business groups are convinced it would end up as a rubber stamp for union demands.

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More significantly, according to supporters and opponents of the law, the council’s operations would amount to a dramatic departure from how wages and working conditions are currently established in this country. Typically, unionized workforces labor under contracts negotiated between unions and management, while at workplaces that are not unionized, executives simply call the shots.

The California law sets up an entirely new system, similar to some seen in European countries, with a government-appointed council making binding decisions on many key issues. Proponents and some outside observers say such a system is sorely needed, particularly after the pandemic exposed dangerous working conditions at some fast-food outlets where workers in some cases were forced to come into work sick or without proper protective equipment.

“This was always the next step in the minds of the workers, which is how are we going to win the union part of our journey and create a permanent organization where we can address sexual harassment, wage theft, burns on our arms, the lack of training and mobility,” said the SEIU’s Henry.

She said the needed change can’t happen “if we tried a very traditional way of organizing under what we consider to be outdated, racist and sexist labor laws in which we’d be going one store at a time and trying to bargain with a franchise owner who doesn’t really have the power to raise wages or change conditions because the economic decisions are made in the home offices of the multinationals.”

Business groups dispute claims of rampant labor violations, pointing to an industry-funded study purporting to show that the fast-food industry is no worse than other industries and better than many when it comes to wage theft and labor law violations. They argue that the council is actually a backdoor attempt by organized labor to get what amounts to union contracts in place in an industry it has largely failed to organize. They warn of food prices rising as much as 20 percent should the law take effect — a figure labor-aligned academics dispute — and of fewer jobs for California workers as potential store franchise owners conclude they cannot do business in the state.

“This is really about unions trying to grow their market share in the restaurant industry,” said Matthew Haller, president and chief executive of the International Franchise Association, adding that “the premise that the law was built on doesn’t stand up to the facts.”

“We weren’t dealing in facts, we were dealing in politics, and of course unions have a lot of friends in California and ultimately a lot of people are taking orders from them, not necessarily listening to the consequences of what this is going to do for food prices and the ability for franchisers” to operate in California, Haller said.

Opponents, who have already spent millions to oppose the law, say they are well on their way to collecting the requisite 623,212 signatures they need to submit by Dec. 5 to get a proposition overturning the legislation on the next statewide ballot.

Supporters are not waiting to take on the fight. On Tuesday, fast-food workers and supporters up and down the state organized by the SEIU staged demonstrations outside fast-food restaurants to try to draw attention to their cause and protest their opponents’ effort to overturn the new law.

“I don’t believe it’s fair” for business groups to try to overturn the law, said Maria Bernal, 43, who has worked at Jack in the Box in Sacramento for 10 years and was participating in Tuesday’s protest. Getting the law in place, she said, “is an emergency.”

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