Worker empowerment or government overreach? California’s fast food bill tests labor laws

Irina Baranova

Amid growing awareness of inequality and jobs that don’t pay enough to cover child care and housing, California legislators are considering a radical proposal: Allow the state to negotiate wages, hours and work conditions for an entire industry.

Proponents in the state Legislature say one solution to inequality is to empower workers to negotiate through unions, but that’s not happening in the fast food industry, where frequent turnover, inexperience and intimidation make it too difficult for workers to organize. Only 3% of fast food and counter workers belong to unions nationwide.

In Sacramento, a union-backed Democratic proposal called the Fast Food Accountability and Standards Recovery Act, or Fast Recovery Act, would establish a state-appointed council to enact industry-wide minimum standards for wages, working hours and work conditions. If passed by state lawmakers and signed by Gov. Gavin Newsom, the proposal would also hold corporate franchisors responsible for compliance, not just the local franchise owners.

“California has the opportunity to really pave a path forward in a way that can work for both workers and employers,” said David Madland, a senior adviser to the American Worker Project at the Center for American Progress, a liberal Washtington, D.C., think tank.

Legislation to approve the Fast Recovery Act, AB257, fell three votes short of passing the state Assembly last June with eight Democrats voting no and another 13 not voting. Newsom did not take a position.

Workers rally for better conditions and to demand passage of AB257 in front of Burger King in San Diego in November.

Ariana Drehsler/CalMatters 2021

With strong support from major state labor groups, the issue is expected to resurface this year, even though the bill’s author, Assemblymember Lorena Gonzalez, unexpectedly resigned from office the first week of January to transition into chief officer of the California Labor Federation, which supports the proposal.

One of the nation’s largest unions, Service Employees International Union, vowed to continue pushing the bill. It funds the Fight for $15 and a Union campaign, which organizes low-wage workers to advocate for better wages and work conditions, primarily in fast food.

Proponents say the Fast Recovery Act is needed to address low wages and poor conditions for workers. California’s fast food workers — a majority of whom are people of color, Latino and women — made an average $14.73 an hour in 2020, with California’s minimum wage rising to $15 this month for most businesses. Proponents also point out they are more vulnerable to COVID-19 and more likely to encounter injury, wage theft, customer assault and harassment.

A new report from the UCLA Labor Center documents dangerous conditions during the pandemic, with nearly a quarter of surveyed workers having contracted the virus. Less than half said their employers offered paid sick leave — mandated by state and federal law — to workers who got COVID-19.

The idea of negotiating wages and work conditions for an industry has been modeled for many years in Europe and around the world and is known as “sectoral bargaining.” Multiple studies of sectoral bargaining in other countries have found evidence that it reduces inequality, and tends to swell union ranks — with some notable exceptions. But a number of European studies find that sectoral bargaining can reduce profits or productivity for companies.

Under current American labor law, true sectoral bargaining is rare because multiple employers would have to voluntarily agree to come to the same negotiating table with workers, said Madland, the researcher at the Center for American Progress.

The California proposal would carve a state path by directing an 11-member council — composed of fast food workers, franchisees and franchisors, and state health, safety and labor officials — to do the negotiating. The governor and leaders in the state Senate and Assembly would appoint the members. Its rules would be revisited every three years and, unlike traditional collective bargaining, they would be enforced by state agencies. The laws would apply to every restaurant that belongs to a fast food chain with 30 or more franchises.

It’s a highly controversial proposal with opposition from industry, Republicans and a divide among Democrats.

Before the bill’s failed Assembly vote in June, Assembly Member Ken Cooley, a moderate Democrat from Rancho Cordova, said the power given to an unelected council was an “exceedingly problematic” precedent that is “undermining of the rule of law.”

Business groups are also adamant the government stay out of private negotiations. They argue the free market adjusts wages where it is needed, citing the fact that many California fast food restaurants are now raising their wages to $17 or $18 per hour to attract workers amid a labor shortage. Republicans said the bill was an example of government overreach that would destroy minimum wage jobs and small businesses. Meanwhile, the coalition of organizations lobbying against the bill, which include 40 local and ethnic chambers of commerce, launched a website with the slogan “Stop the Takeout Takeover.”

Industry groups also questioned whether the new model is needed since California is known for the strictest labor standards in the country, such as being first to set the $15 minimum wage and protections against heat illness.

“Throwing all of that out to this test case of a panel is absurd,” said Matt Sutton, a senior vice president at the California Restaurant Association.

Assembly Member Lorena Gonzalez, D-San Diego, rallies for worker rights outside Burger King in San Diego in November.

Assembly Member Lorena Gonzalez, D-San Diego, rallies for worker rights outside Burger King in San Diego in November.

Ariana Drehsler/CalMatters 2021

Sutton also said the Fast Recovery Act’s extension of liability to corporate franchisors could raise costs and potentially drive fast food chains out of the state.

Gonzalez said she also believes her bill is not the best solution. She says the state government shouldn’t be in the business of bargaining and she would rather maintain “a private-sector approach to reducing income inequality.” Unions, Gonzalez added, do a better job responding to workers’ needs worksite by worksite instead of one-size-fits-all state labor laws, which employers fight and the government enforces unevenly.

But given that businesses continue to fight union drives, Gonzalez said, and the U.S. Congress has stalled on federal labor law reform, the Fast Recovery Act is necessary to help workers and, she hopes, encourage more support for labor unions.

For now, though, Assemblymember Ash Kalra, a San Jose Democrat who chairs the Assembly labor and employment committee, said that where labor organizing campaigns have failed in low-wage industries, the government needs to act.

Imelda Arroyo agrees. A McDonald’s worker who helped organize two-week walkouts during the pandemic, with support from Fight for $15, she earns $15.50 per hour at a McDonald’s in Oakland. She has little left for her 7-year-old daughter after paying $1,950 for rent.

The single mother feels she deserves better wages, health insurance, paid sick leave, and “a place where we can explain our concerns” before having to resort to strikes.

Even though “fast food workers like me don’t have a union,” Arroyo said, “at least we are hoping to get something like AB257.”

Jackie Botts and Jesse Bedayn write for for CalMatters a nonprofit, nonpartisan media venture explaining California policies and politics.

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