In summary

The governor announced his decision on Labor Day. Supporters swayed moderate Democrats by removing a provision that would have put fast food corporations on the hook for labor violations at franchise locations.

On Labor Day, Gov. Gavin Newsom announced he’s signing a first-in-the-nation bill creating a council to regulate wages and working conditions in fast food restaurants.

The new law will give labor advocates a long-elusive bargaining foothold in a low-wage industry that employs more than half a million non-unionized workers statewide.

“California is committed to ensuring that the men and women who have helped build our world-class economy are able to share in the state’s prosperity,” Newsom said in a statement. “Today’s action gives hardworking fast-food workers a stronger voice and seat at the table to set fair wages and critical health and safety standards across the industry. I’m proud to sign this legislation on Labor Day when we pay tribute to the workers who keep our state running as we build a stronger, more inclusive economy for all Californians.”

The United States and California have used boards for other industries before to set minimum wages, particularly during the first half of the 20th century. But, Andrias said, the fast food bill is “a more expansive and ambitious variation” of those past efforts by having workers sit directly on the council and covering a wider range of working conditions.

Business and restaurant groups, which spent big on TV advertising opposing the bill, released a statement urging Newsom to veto it. They have said fast food is being unfairly targeted and warned the new regulations would force restaurants to increase prices at a time of record inflation.

The broadcast and digital ads called the bill a “food tax.”

“Upending our state’s existing lawmaking structure and regulatory platform is no way to help workers,” said Jot Condie, California Restaurant Association president, in a statement.

Key compromises

Newsom signed the bill, even though his Department of Finance opposed it, saying it would create ongoing costs and worsen delays in the state’s labor enforcement system.

Supporters said the bill incorporates their discussions with the Newsom administration.

Aside from the removal of labor liability for fast food chains, the bill’s other changes include provisions preventing the council from requiring any new paid leave benefits for workers, or from regulating how fast food restaurant operators schedule workers’ hours. Also any minimum wage the council sets would be capped at $22 an hour in 2023 and subject to inflationary increases in future years. The bill also includes a six-year expiration date.

Some food businesses would be exempt from the council’s rules, including bakeries, grocery store fast food counters, and chains with fewer than 100 locations nationally —that’s up from a prior threshold of 30 locations or less.

Balancing act

It was not immediately clear how many business or workers would be excluded by raising that threshold. For franchised brands with locations in California, the number of chains fitting the description fell from 149 to 84, according to the International Franchise Association.

The bill would give workers and their advocates an equal number of seats on the council as business representatives. The rest of the council would include two representatives of the governor’s administration – from the Labor & Workforce Development Agency and the Office of Business and Economic Development.

Sen. Dave Min, an Irvine Democrat, said he initially “had some deep concerns” about the legislation but supported the more limited version.

“I feel it’s our duty to protect our business centers from overburdensome state regulations, but we also have to balance that against the rights of the workers that serve us,” he said.

Jeanne Kuang

[email protected]

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