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New California law could raise fast-food workers’ minimum wage to $22 an hour

Governor Gavin Newsom signed the act into law on Labor Day.

This week, California Governor Gavin Newsom signed an act into law that could raise the minimum wage for fast-food workers to over $20 an hour for the first time in American history.

On Sept. 5, AB 257, or the Fast Food Accountability and Standards Recovery Act, was signed into law by Newsom. The law, authored by Assemblymember Chris Holden, authorizes the creation of a Fast Food Council, which will be made up of 10 representatives from labor and management sectors and set minimum standards for workers in the industry.

Fast-food workers and their supporters march past the state Capitol calling on passage of a bill to provide increased power to fast-food workers, in Sacramento, California on Tuesday, Aug. 16, 2022.
Fast-food workers and their supporters march past the state Capitol calling on passage of a bill to provide increased power to fast-food workers, in Sacramento, California on Tuesday, Aug. 16, 2022.Rich Pedroncelli / AP

According to an Aug. 5 statement by the governor’s office, members of the Fast Food Council will include fast-food workers and their advocates, franchisees, franchisors and representatives from the Governor’s Office of Business and Economic Development and the Department of Industrial Relations

Further, the standards the council will address will include conditions related to health and safety, security in the workplace, the right to take time off from work for protected purposes, protection from discrimination and harassment, and worker wages. 

A recent Harvard Kennedy School and UC San Francisco study found that wage averages for fast-food workers in California average at about $16.21 an hour, $2.57 less than the average for other service workers in the state. AB 257 could raise wages as high as $22 an hour next year for chains with 100 or more locations across the U.S., becoming the first law of its kind in the nation and leading the way for other states to potentially follow suit.

“California is committed to ensuring that the men and women who have helped build our world-class economy are able to share in the state’s prosperity,” said Newsom in a written statement. “Today’s action gives hardworking fast-food workers a stronger voice and seat at the table to set fair wages and critical health and safety standards across the industry. I’m proud to sign this legislation on Labor Day when we pay tribute to the workers who keep our state running as we build a stronger, more inclusive economy for all Californians.”

Opponents of the new law include the International Franchise Association (IFA), a membership organization for over 1,400 franchise brands and 775,000 franchise small businesses nationwide that includes McDonald’s, Wendy’s, Sonic and more.

The IFA released a statement after the act was signed into law saying that the legislation “singles out the quick-service restaurant industry and the franchise business model,” and stands to increase prices at impacted restaurants across the state, harming “local businesses, without improving existing worker protections in the state.”

“By signing this bill, Gov. Newsom is siding with special interests rather than the people and small businesses of California,” said Matthew Haller, president and CEO of the IFA in a statement. “This bill has been built on a lie, and now small business owners, their employees, and their customers will have to pay the price. This bill is a fork in the eye to franchise owners and customers at a time when it hurts most.”

A 2020 report by the Harvard Law School project Clean Slate for Worker Power found that franchises typical to fast-food restaurants create a setting where “management would likely want to pass any wage gains secured by the union onto the customers in the form of higher prices.” The study added that situation "is modestly, but not fundamentally, improved if collective bargaining were to take place between unions and complete fast food chains." This also comes as fast-food inflation has reached new heights amid rising costs across all industries.

The minimum wage in California is currently $15 an hour for employers with 26 or more employees and $14 an hour for employers with 25 or less employees. Even so, that minimum wage is currently among the highest in the nation, along with states like New York, Washington and Washington, D.C., according to the Department of Labor.

Still, according to a living wage calculator created by Dr. Amy K. Glasmeier for MIT, which generates a cost of living estimate that exceeds federal poverty thresholds, the current living wage in California is $21.82 for an adult with no children. That amount jumps to $44.18 for a single adult supporting one child and to as much as $73.98 for a single adult with three children.

During his tenure, Newsom has enacted various legislation that aims to expand the protections and workers have in various industries within the state of California, including signing a bill establishing an hourly rate for garment industry workers and another aiming to address working conditions for the state’s warehouse workers, including Amazon and others.