No doubt about it. We do live in inflationary times, and California might be intent on making that problem worse. What happens in California also does not stay in California, so employers will want to watch out for when the rest of the U.S. starts to follow suit.
Some context: Healthcare workers in the Golden State are moving towards a $25 industry minimum wage. That incremental process bumps workers at larger clinics to $23 per hour in 2024 and $25 in 2026. Workers at smaller, more Medicaid-reliant hospitals would only bump up to $18 in 2024 and slowly move up to $25 by 2033.
Where this gets weird: Most fast food workers in California are poised to earn $20 per hour in 2024. In other words, fast times might really be faster for 500,000 fast food workers than for some licensed healthcare workers. It’s a sobering thought.
What happened? A compromise that will almost certainly be signed into law.
This news follows intense lobbying efforts by the SEIU after the Fast Food Accountability and Standards (FAST) Recovery Act, or AB 257, was placed on hold for a Nov. 2024 ballot referendum. Gov. Newsom had signed that bill, which would have mandated $22 per hour for fast food workers employed by chains with 60+ locations nationally. AB 257 also set up a “Fast Food Council,” through which workers could bypass employers and bargain through the industry as a whole.
The SEIU reacted to FAST roadblocks with strikes, and employers expressed concerns about FAST placing an unfair financial burden on franchise owners.
What’s in the compromise: As noted above, the fast food minimum wage will now be $20 rather than $22 per hour. The Fast Food Council’s authority will be more limited, essentially by withdrawing AB 257. An updated set of standards will be the result of modifying another bill, AB 1228, which will provide the new framework of what was envisioned as FAST. Some key modifications:
- The Council’s nine-member voting body will no longer be able to prescribe binding standards and can now only make limited recommendations for working conditions and wages.
- The Industrial Welfare Commission will no longer receive resurrected state funding – to establish further wage boards for other industries – for the first time in two decades as originally planned. That continued IWC defunding is important if only to insulate other industries from enduring similar sweeping changes.
- AB 1228 would have increasingly burdened the fast food industry by making franchisors jointly liable for any franchisees’ violations of laws regarding wages, scheduling, and more. That joint liability has now fallen off the table.
Does this spell the end of formal unionization efforts for California’s fast food industry? Nope. Any collective bargaining agreement will supersede AB 1228 and the Council.
Stay vigilant: Copycat laws could soon be in process in the other U.S. states with Democratic governors and lawmakers. Also, yes, this newest stunt from California will obviously do nothing to curb rampant inflation.
