California regulates the fast food industry with the promise of better wages and decent conditions

This week, California took a big bite out of the fast food industry. The US state intends to empower restaurant employees with a new law, which California Governor Gavin Newsom signed on Monday. The norm intends to impose minimum standards for the sector’s 700,000 employees, with a council that will monitor dozens of chains, including Starbucks and McDonald’s. This body will be able to raise salaries and improve working and training conditions. It will also issue guidelines for a sector that has a high turnover in California, considered the fifth-largest economy in the world.

The Fast Food Council will be made up of 10 members, with equal numbers of workers’ delegates and employers’ representatives. It has carte blanche to issue recommendations for the industry. This includes raising the minimum wage from the current $15.50 an hour to $22, which would make it one of the highest in the country. The council may also study any proposal backed by at least 10,000 fast food workers.

“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,” said Newsom on Monday. Last week, when the law was approved by the California Senate, it was still unclear whether the governor had enough support to pass the measure in the Assembly. Some members of his own party had criticized the initiative, and employers had openly repudiated it. The California government, however, now describes the initiative as a way to promote sectoral collective bargaining.

In California, the fast food workforce is more than 60% Latino, according to research from the University of California in Los Angeles and UC Berkeley.

Under the law, the Fast Food Council model could be replicated on a local level in cities and counties with more than 200,000 inhabitants. Only chains that have more than 100 restaurants throughout the country will be subject to the new rule. The restriction is intended to protect small businesses, but critics are concerned about how it will affect the more than 16,700 franchises in California.

The law is seen as the latest progressive step in the wave of unionization efforts that have swept the United States. Since December, employees at more than 200 Starbucks coffee shops and an Amazon warehouse have unionized. For a decade, fast food workers have been calling for the minimum wage to be raised to at least $15 an hour. On May 21, hundreds of McDonald’s employees in 16 cities in the country – including three in California – protested to demand the pay raise. The demonstration came a day before the burger chain held its annual shareholder meeting. Last year, McDonald’s set the minimum wage at $13 for most of its restaurants.

Kate Andrias, an employment law expert at Columbia University, called the Californian initiative “one of the most important state laws passed in a long time.” Labor organizations have also applauded the measure, which they believe will empower workers. “The passage of AB257 is the most significant advance in workers’ fight for fairness on the job in a generation,” said Mary Kay Henry, president of the Service Employees International Union, an organization with more than two million members. “It’s time for corporations like McDonald’s, Amazon, Starbucks and Delta to come to a national bargaining table to raise industry standards and ensure that every employee is respected, protected and paid a living wage,” she added.

Passing the bill has been a long process. Last year, it did not receive enough votes in the California State Assembly, partly due to the pressure and lobby campaign of fast food chains. The text of the norm was picked up again in January, but several changes had to be made to appease the business sector and center-leaning congress members. One change, for example, was the elimination of a clause that made franchise owners responsible for violations committed by the parent company. This was deleted from the text because some argued that it could affect the economy and reduce the number of new franchises in the future.

In June, the California Department of Finance opposed the new law in a fiscal analysis. “It creates a sector-specific rule-making body within DIR [Department of Industrial Relations], which could lead to a fragmented regulatory and legal environment for employers and raise long-term costs across industries,” it stated. Indeed, many critics of the law believe it will force fast food restaurants to increase prices – a blow to a sector whose business is based on attracting low-income consumers with affordable meals.