California Fast Food Workers Have Won A $20 Minimum Wage

2 Oct 2023 

It’s these types of incremental reforms that build the basis from which workers can continue the fight for more.

Back in August 2022, I wrote about a newly passed law in California that would create a sector-wide labour-management council giving fast food workers the right to bargain over wages and standards in their industry. At the time, myself and many others considered the law a significant victory.

Not long after I originally wrote that piece, fast food corporations, such as McDonald’s, Chipotle, Burger King and Starbucks, as well as local franchisees, organized a ballot initiative to temporarily prevent the law from coming into force. The companies’ plan was to put the issue to a referendum vote in November 2024, giving them ample time to inundate voters with propaganda directed against the law. In California — like many other U.S. states — single issue campaigns can be put to a vote via ballot initiative, provided the campaigners gather the requisite number of signatures. 

Unfortunately, the companies managed to gather the required signatures and so workers’ hopes for a fast food council were put on hold until the next presidential election cycle. Or so it appeared until earlier this month. 

After both sustained pressure from unions and workers, and changes to the law governing ballot initiatives in the state, the companies backed down and pulled the plug on their referendum plans. 

This is a huge win, not only for workers in California, but for workers, unions and labour advocates across the U.S. and beyond. The original bill — Assembly Bill (AB) 257, also known as the Fast Food Accountability and Standards Recovery Act — was set to give fast food workers an immediate wage bump and a voice over wages, working conditions, and standards in their industry. But perhaps more importantly, it presented a unique opportunity to test a new model of sectoral bargaining and standard-setting. 

The deal just reached in California to preserve this model is therefore vitally important. Those who recognize the many ways that North American labour law under-serves and under-protected workers will be watching the new fast food council closely. 

It’s worth returning to the details of AB 257 to fully gauge the potentials and pitfalls of this new law and the council system it will create. AB 257 created a state-wide, nine member sector council (in its original draft form, the law called for 13 members) made up of labour and employer representatives, as well as regional councils to discuss local issues and make recommendations. The council set to be formed out of the new compromise will consist of two franchise owners, two representatives from the fast-food corporations, two union representatives, two rank-and-file workers and one public member. 

AB 257’s fast food sector council, while focused heavily on raising wages, was also the outcome of the COVID-19 pandemic and thus had a strong focus on improving workplace health and safety, as well as giving workers representation and voice over working conditions. Importantly, it granted fast food workers the right to refuse unsafe work and provided mechanisms to raise health and safety issues to the council. 

The labour movement, particularly the Service Employees International Union (SEIU) and the California AFL-CIO, pushed hard for AB 257l, were instrumental to securing its initial passage, and have spearheaded the campaign against the ballot initiative to stall and repeal the law.

Restaurant corporations of course vehemently opposed AB 257 from the start, arguing that they couldn’t bear the costs of a sectoral bargaining model and that increased labour costs would be passed on to customers as higher prices. 

The culmination of employer opposition was the campaign to qualify a ballot initiative, a tactic which is a variation on the referendum used by corporations and the rich to thwart progressive legislation and blunt the efficacy of democratic representation. 

Workers and the labour movement responded to these disappointing developments through a multi-pronged legislative campaign, pressure on Democratic lawmakers and worker mobilization.  

Unions opposing the ballot campaign argued that, like in many previous initiatives, the companies used questionable methods during the signature gathering process and were intentionally attempting to confuse voters about the issue. The result was a piece of union-supported legislation making it easier for voters to understand the intent of ballot questions — and also allowing ballot initiators to withdraw their measure. Importantly, this new law, AB 421, changes ‘yes/no’ questions to ‘keep the law/overturn the law’ to prevent campaigns from misrepresenting the intent of their ballot initiative. 

Then, through a separate bill (AB 1228), unions sought to make parent corporations liable for the labour law compliance of their franchisees. This is considered by many labour law experts to be a viable and necessary way to improve labour standards compliance. In SEIU and other California unions’ case, pursuing this reform was a further way to exert pressure on the companies to withdraw their referendum plans. 

As an additional insurance policy, California Democrats used the state budget process to resurrect a defunct sector council — the Industrial Welfare Commission (IWC) — that already had wide latitude to raise wages for workers in particular industries, including fast food. In other words, the resurrection of the IWC provided another avenue to accomplish some of what AB 257 sought to do, which further undermined the corporate campaign to repeal the law. 

The combination of these legislative tactics proved sufficient to force the fast food corporations to relent. 

Securing Governor Gavin Newsom’s signature on the revised fast food council bill did, however, require some concessions from workers and unions. The most significant drawback is that major corporations will not be held liable for the labour violations of local franchisees. While this was a goal of organized labour’s campaign, it was unfortunately abandoned in the final negotiated settlement. As well, some of the council’s additional powers to set industry standards have been paired down. 

During the original AB 257 campaign and the haggling over the law’s details, franchisees were a formidable obstacle. Many franchises are effectively run like small businesses and face tight margins, yet also contend with the many pressures placed on them by parent corporations. Leaving fast-food franchise owners liable could pose compliance and enforcement challenges down the road.

Still, now that the law is set to come into force, employees at fast food establishments with 60 or more locations nationally will see their starting wages rise to $20 per hour in April 2024. Henceforth, wages will be indexed to inflation, with the ability to rise by up to 3.5 per cent annually. However, the text of the bill still allows wages and many working conditions to be debated and set by the council. The council will meet for the first time in March. Its jurisdiction will cover roughly 550,000 workers, the majority of whom are racialized. 

The LA Times reports that had the ballot initiative gone ahead, the campaign would have likely seen spending of over 100 million USD. These are sums unions would have a hard time mustering and are, obviously, better spent elsewhere. 

Enormous corporate spending in response to progressive legislation is now a central feature of American politics. Recall the mountain of money that tech companies, such as Uber and Lyft, shovelled into their campaign to defeat a law that would have granted employee status to bogusly misclassified ‘independently contracted’ gig drivers. The tech giants misinformed and convinced Californians to vote “yes” on their ballot, claiming that doing so would raise drivers’ pay, when the exact opposite was true. 

While a major victory, we have to also be sober about the limits of AB 257. The law was never intended to create a fully sectoral bargaining model. It lacked the reach and capacity to meaningfully bargain over many issues, and it had too few channels for worker and union involvement. 

When the council comes into effect, much will also depend on the capacity and willingness of the state’s Department of Industrial Relations to enforce standards and punish employer violations.

However, the law does, even in its revised, slightly compromised form, represent a significant step forward. As advocates of broader-based, sectoral bargaining systems argue, these types of standard-setting arrangements can both improve the material conditions of workers and serve as stepping stones to greater worker power. 

Although some critics may find fault with the fast food council model, no one can seriously contend that workers in California won’t be markedly better off in April 2024 than they were previously. It’s these types of incremental reforms that build the basis from which workers can continue the fight for more.

[Top photo: Gov. Gavin Newsom signed a deal Thursday that will give fast-food workers a pay bump in 2024. LA Times]