California Unions and Fast Food Companies Compromise On $20 Minimum Wage

Fast food companies and the Service Employees International Union (SEIU) reached an agreement on Monday for a $20 fast food minimum wage that local governments could not increase until the agreement ends at the end of the decade.

For the last several years, fast food companies and unions including the SEIU have been in a constant battle over minimum wages, company liability, and threatened ballot initiatives. Last year, the passage of AB 257, which establishes a Fast Food Council to look after the “minimum standards for the fast food industry on wages, working hours, and other working conditions related to employees’ health, safety, and welfare”, essentially unionized well over 550,000 fast food workers in the state. In addition, fast food worker minimum wages went up to $22 an hour.

Faced with drastically increased costs, fast food companies took action. The number of electronic kiosks instead of cashiers swiftly climbed across the state, with a ballot referendum that would overturn AB 257, as well as put the law on hold until at least November 2024, getting enough signatures earlier this year. In retaliation, lawmakers in Sacramento introduced a bill earlier this year that would make fast food franchisees and companies more liable for labor law violations. The Industrial Welfare Commission was also refunded, potentially threatening to set up additional wage and workplace standards for the fast food industry.

With fast food companies looking at new astronomical costs and unions looking at a major loss and a potential destruction of a new minimum wage and state council, both sides met earlier this month to discuss a deal. On Monday, this was reached. Under the deal, minimum wages for fast food workers would go up to $20 an hour rather than $22 starting in April 2024, with local governments being prohibited from raising them even further. The raise would only apply to chains with 60 or more nationwide locations and would not apply to chains that also operate an on-site bakery, such as Panera Bread.

The Fast Food Council, meanwhile, would be able to raise the minimum wage each year through 2029, but would no longer have the power to set workplace standards, only recommendations. They would also be prohibited from implementing paid leave, vacation, predictive scheduling, and other standards wanted by the SEIU and other unions.  Also under the agreement, Franchise corporations would no longer be held for labor law violations at individual locations.

These new changes in AB 1228 need to be approved by the Legislature and Governor Newsom first, and would only go into effect if the fast food companies pull the referendum from next years ballot.

A new compromise deal

Both sides, while disappointed with several aspects of the compromise, nonetheless highlighted the points in the agreement they won on Monday.

In a statement, SEIU California President David Huerta said that  “AB 1228 clears the path for fast food workers to start making much-needed improvements to the policies that affect their own workplaces and their lives. It will give voice and structural power to more than half a million fast-food workers in our state; it will also ensure that franchisees have a seat at the table — along with workers, advocates, franchisors, and the State. We urge the legislature to pass AB 1228 and take this huge step toward tackling poverty and inequality.”

National Restaurant Association Vice President Sean Kennedy added, “This agreement protects local restaurant owners from significant threats that would have made it difficult to continue to operate in California.