California passed its sweeping fast food wage tax law this week. The regulation, known as the FAST RecoveryAct (Fast Act) or AB 257, will set by executive order the minimum wage for fast food industry workers at $22 an hour, exceeding the state's established $15 minimum wage by $7. In addition, it will create a 'Fast Food Council' in which state officials will intervene in the operation and development of the sector.
The bill must be endorsed by Governor Gavin Newsom, who is being asked by numerous associations and business owners to veto the legislation. The Wall Street Journal has reported that a number of fast food companies such as McDonalds, have asked their franchisees to send letters to lawmakers in order to vote against the bill. Should the bill pass, these companies could stop expanding in California and may even leave the state altogether.
The original bill, passed in January, required large chains to be joint employers with their franchisees, which could expose them to liability for labor violations by the latter. However, pressure from these large companies resulted in amendments that have modified the final content of the law.
What is the Fast Act?
The Fast Act, Recovery Act or AB 257 will create a 10-member 'Fast Food Council' composed of worker delegates, employer representatives and two state officials that will set standards for minimum wages, hours and working conditions in the sector.
Along with the state Fast Food Council, the bill allows California cities and counties with a population of 200,000 or more to create their own local councils and to make recommendations to the state council.
Opponents of the bill warn that the regulation will cause product prices to rise in a context of skyrocketing inflation and warn of a control over private businesses typical of socialism. Senator Brian Dahle, candidate for governor of California, warned of this price hike and the move to unionize fast food workers.
The people of California deserve better. They deserve to have a governor who will listen to industry leaders and allow them to have a seat at the table. Instead, Californians are getting one mandate after another without a viable pathway for implementation. #Governor #VoteDahle https://t.co/1xOnHC5BZj
- Senator Brian Dahle (@BrianDahleCA) August 30, 2022
According to the University of California's Center for Economic Forecasting and Development, California consumers can expect to pay 20% more at local restaurants should the legislation go forward. Even the California Department of Finance opposed the bill stating that it would create a "fragmented regulatory and legal environment for entrepreneurs and increase costs in the long run." The final direction of Newsom's vote is currently unknown.
For their part, several Democratic representatives expressed their satisfaction with this law and hope that it will be extended throughout the country.
