Controversial California Fast Food Minimum Wage Law Placed On Hold

A California court issued a temporary hold on a law that would establish a board permitted to increase minimum wages received by fast food workers.

The Fast Food Accountability and Standards Recovery Act, also known as the FAST Recovery Act, would create a “Fast Food Council” responsible for drafting “sectorwide minimum standards on wages, working hours, and other working conditions,” according to a summary of the bill, which Governor Gavin Newsom (D-CA) signed three months ago. The Sacramento Superior Court paused the implementation of the law, which was slated to enter into effect on January 1, and scheduled a hearing for January 13.

Save Local Restaurants, an advocacy group that garnered more than one million signatures to place the FAST Recovery Act on statewide ballots in the 2024 election, said in a press release that the court’s ruling upholds the California referendum process.

“Today’s decision by the Sacramento Superior Court protects the voices of over one million California voters who exercised their democratic right in asking to vote on a piece of legislation before bearing its burden,” the coalition said. “This process has been preserved for more than 100 years and was in grave risk of being suppressed. While this pause is temporary, the impact is beyond just one piece of legislation and keeps intact for the time being California’s century-old referendum process.”

The legislation, backed by the powerful Service Employees International Union, only applies to restaurants with 100 or more establishments across the United States, though a carveout exists for chains operating a bakery that “produces for sale bread as a stand-alone menu item.” Members of the Fast Food Council would be permitted to raise minimum wages up to $22 per hour, representing an increase of over 40% from the $15.50 minimum wage already slated to take effect in California.

Save Local Restaurants contends that the FAST Recovery Act would place an undue burden on businesses across the state and raise food prices for residents. The bill comes after many restaurants were forced to close their doors following the state’s harsh lockdown measures.

A poll of labor economists conducted by the Employment Policies Institute, a fiscally conservative think tank, found that 83% oppose the FAST Recovery Act, while strong majorities agree that the law would increase operating costs for restaurants, lead to higher food prices for customers, and cause the closure of restaurants.

McDonald’s USA President Joe Erlinger, an opponent of the bill, previously argued that the law arbitrarily imposes “higher costs on one type of restaurant, while sparing another” and postulated that “backroom politicking” could explain the carveout for restaurants with a bakery.

“If you are a small business owner running two restaurants that are part of a national chain, like McDonald’s, you can be targeted by the bill,” he wrote in a letter denouncing the bill. “But if you own 20 restaurants that are not part of a large chain, the bill does not apply to you.”

Several leading fast-food companies have unveiled moves to automate restaurant operations as minimum wage hikes and persistent labor shortages disadvantage employers in the job market. McDonald’s recently created a test restaurant in Texas in which customers can use kiosks and a mobile app to grab their orders from a conveyor belt rather than interacting with customer-facing staff, while Chipotle tested a robotic chip maker in a California location.

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