California Voters to Decide on Regulating Fast-Food Industry

LOS ANGELES — A California law creating a council with broad authority to set wages and improve the working conditions of fast-food employees has been halted after restaurant and trade groups submitted enough signatures to place the issue before voters next year.

Officials from the California secretary of state’s office announced late Tuesday that Save Local Restaurants, a broad coalition of small-business owners, large corporations, restaurateurs and franchisees, had turned in enough valid signatures to stop the law from taking effect.

The group, which has raised millions of dollars to oppose the law, had to submit roughly 623,000 valid voter signatures by an early December deadline to place a question on the 2024 ballot asking California voters if the law should take effect.

Legislation signed in September by Gov. Gavin Newsom, a Democrat, would set up a 10-member council of union representatives, employers and workers to oversee the fast-food industry’s labor practices in the state.

The panel would have the authority to raise the minimum wage of fast-food workers to as much as $22 an hour — well above the statewide minimum of $15.50. In addition, the council would oversee health, safety and anti-discrimination regulations for nearly 550,000 fast-food workers statewide.

Opponents including the International Franchise Association and the National Restaurant Association argued that the measure, Assembly Bill 257, singled out their industry and would in turn burden businesses with higher labor costs that would be passed along to consumers in higher food prices.

Matt Haller, president of the International Franchise Association, said the bill “was a solution in search of a problem that didn’t exist.”

“Californians have spoken out to prevent this misguided policy from driving food prices higher and destroying local businesses and the jobs they create,” Mr. Haller said.

Last year, the Center for Economic Forecasting and Development at the University of California, Riverside, released a study that estimated that employers would pass along roughly one-third of labor compensation increases to consumers.

But Mr. Newsom, in signing the measure, said it “gives hard-working fast-food workers a stronger voice and seat at the table to set fair wages and critical health and safety standards across the industry.”

Mary Kay Henry, president of the Service Employees International Union, a staunch proponent of the measure, assailed fast-food corporations.

“Instead of taking responsibility for ensuring workers who fuel their profits are paid a living wage and work in safe, healthy environments, corporations are continuing to drive a race to the bottom in the fast-food industry,” Ms. Henry said. “It’s morally wrong, and it’s bad business.”

The effort to put the issue before voters follows a playbook used by large corporations to circumvent lawmakers in Sacramento. In 2019, state lawmakers passed a measure that required companies like Uber and Lyft to treat gig workers as employees. The companies opposed the measure and helped get a proposition on the 2020 ballot allowing them to treat drivers as independent contractors. The measure passed with nearly 60 percent of the vote.

The fast-food law has been closely watched by the industry’s workers across California, including  Angelica Hernandez, 49, who has worked at McDonald’s restaurants in the Los Angeles area for 18 years.

“We are undeterred, and we refuse to back down,” Ms. Hernandez said. “We can’t afford to wait to raise pay to keep up with the skyrocketing cost of living and provide for our families.”

Alison Morantz, a professor at Stanford Law School who focuses on employment law, said what made the law unusual was “its holistic approach to addressing a wide range of problems in a traditionally nonunionized industry — not just low and stagnating wages, but also employment discrimination and poor safety practices.”

“If it takes effect, it will be closely watched and could become a harbinger of similar efforts in other worker-friendly jurisdictions,” Ms. Morantz said.