California Passes Bill to Regulate Fast-Food Wages

    A new 10-member council could raise minimum wage as high as $22 per hour in 2023, and increase it as much as 3.5 percent each year afterward.

    Legal | August 30, 2022 | Ben Coley
    Waiter giving parcel to customer at counter.
    Adobe Stock
    The bill would impact more than 550,000 workers across more than 30,000 locations.

    In a landmark move, the California State Legislature passed a bill Monday that would form a statewide panel to regulate wages for fast-food workers.

    The legislation, called the Fast Act (Fast Food Accountability and Standards Recovery Act), calls for a 10-member council that would be appointed by the governor, speaker of the assembly, and the Senate Rules Committee. The group would comprise two fast-food franchisors, two franchisees, two employees, two advocates of workers rights, one representative from the Department of Industrial Relations, and one from the Governor's Office of Business and Economic Development. The bill also allows cities and counties to establish local fast-food councils to develop solutions in their own regions. 

    The statewide panel would be allowed to raise the minimum wage up to $22 per hour in 2023. Ever year after, it could raise wages up to 3.5 percent annually. As of now, California's minimum wage is $15 and will move to $15.50 at the start of next year. Gov. Gavin Newsom has until September 30 to officially sign the bill into law. The Wall Street Journal reported that although he hasn't taken a public stance, his department of finance was against the original version of the legislation. 

    The bill would impact more than 550,000 workers across more than 30,000 locations. A study from Harvard and the University of California San Francisco found that fast-food workers are paid 85 cents on the dollar compared to non-fast-food service employees. Labor unions have collectively spent more than $5 million to lobby legislators since the start of 2021, the Journal said. 

    “Today’s win in the Senate shows what’s possible when working people unite and raise our voices,” Anneisha Williams, a Los Angeles fast-food worker and leader in the Fight for $15 movement and a union, said in a statement. “Fast food workers like me have done whatever it takes to elevate our demand for AB 257—we’ve gone on strike, marched in the streets and rallied across the state. We’ve shown the world we can take on the most powerful corporations and win. We look forward to Governor Newsom signing AB 257 into law and empowering us to create safe and healthy workplaces across the fast-food industry.”

    Major quick-service brands Chick-fil-A, Jack in the Box, Chipotle, Burger King, Chipotle, and In-N-Out spent more than $1 million in lobbying efforts against the bill, according to the Journal. The International Franchise Association has spent $615,000 in opposition. 

    The UC Riverside School of Business found that minimum wages set between $22 and $43 would inflate labor costs by 60 percent and increase prices by 20 percent. The Association also pointed to research showing less than one-third of Californians support the bill. 

    “AB 257 is a discriminatory measure designed to target the franchise business model," Matthew Haller, president and CEO of the Association, said in a statement. "The bill creates an arbitrary standard for one sector of workers while punishing small business owners and their customers. Franchising has opened the door for hundreds of thousands of entrepreneurs to pursue their dreams and millions of workers to establish a career, but this bill stands to break all that down while raising prices for Californians and forcing restaurants to close their doors. Gov. Newsom should stand up for local businesses, the people of California, and responsible government, and veto this legislation.”