McDonald's is fighting California's fast food bill
New York (CNN Business) California lawmakers want more control over how fast food chains treat workers. Restaurants, including McDonald's, are fighting back.
Earlier this week, the state's legislature passed AB 257, a bill that would create a fast food council to "establish sectorwide minimum standards on wages, working hours, and other working conditions," for California's fast food workers. The council would include worker and franchisee representatives, among others. The new standards would apply to fast food chains with at least 100 locations nationally.
"Fast food companies have profited during the pandemic, while California's one-half million fast food workers have been hard hit," the bill states. "Despite corporate profits, fast food workers are poorly positioned to participate in a fast recovery and a more equitable economy."
If approved, the law would pave the way for a number of changes to the industry in the state. The council could decide to raise the minimum wage for fast food workers up to $22 per hour. And it would allow employees to work together across brands, giving them a better shot at advocating for rights.
California Gov. Gavin Newsom has until September 30 to sign the bill into law, if he chooses.
The bill has garnered opposition from restaurant lobbying groups, and industry leaders including McDonald's (MCD) USA president Joe Erlinger, who spoke out against it Wednesday.
"It may come as a surprise to hear that I support raising minimum wages for workers. In fact, I welcome legislation that increases wages for all workers," Erlinger said.
But "California's approach targets some workplaces and not others," he said, adding, "This lopsided, hypocritical and ill-considered legislation hurts everyone."
Erlinger called the situation a "cautionary tale," and said it "would be terrible" if other states followed California's lead.
The International Franchise Association also took issue with the bill. "AB 257 is a discriminatory measure designed to target the franchise business model," said IFA president and CEO Matthew Haller in a statement. Haller argued that the bill would hurt smaller franchise operators and pointed to a study that suggested higher wages could lead to 20% increases in menu prices. The National Restaurant Association is also against the bill.
But dozens of groups including the Economic Policy Institute, the National Employment Law Project and One Fair Wage urged the state in January to pass the bill.
The pending bill comes as efforts to unionize are taking hold across the food industry. Several Starbucks (SBUX) locations have voted to unionize, despite opposition from management. And workers at a Chipotle (CMG) restaurant in Michigan recently voted to form a union, a first for the chain.
As the organizing efforts grow, proponents of the bill are cheering its progress.
The bill's passage "is a crucial step forward to addressing California's ongoing crises of racial and economic inequality," David Huerta, president of the Service Employees International Union (SEIU) California State Council, said in a statement, pointing to the fact that the majority of fast food workers in California are Black or Latino. "We know the systemic issues workers in this industry face, and the only way to address them is to give cooks and cashiers a real seat at the table with their employers," he said.
"The passage of AB 257 is the most significant advance in workers' fight for fairness on the job in a generation," said SEIU president Mary Kay Henry. "Workers from coast to coast are stepping into their power."
