California's fast food wars yield a truce

Fast food corporations and labor unions in California have struck a deal on worker regulations, defusing a yearslong power struggle and looming ballot fight.

The compromise would preserve until 2029 a workforce regulator state lawmakers created last year with the power to set wages and labor standards for the half million Californians working for major brands like McDonald’s. Wages would rise to $20 by 2024, but local governments would be prohibited from boosting them higher.

Franchise corporations would not be held liable for workforce violations at individual restaurants under the new agreement, a major sticking point in negotiations. The council would also be prohibited from considering predictable scheduling, paid leave or vacation — all perennial goals for organized labor. All of those changes are contingent on the withdrawing a referendum challenging the law.

Language reflecting those changes was published on Monday after negotiations went down to the wire — with Gov. Gavin Newsom’s office acting as a mediator — as the end of the legislative session approached.

“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,” SEIU California President David Huerta said in a statement. “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.”

International Franchise Association President & CEO Matt Haller said in a statement that the pact "protects the franchise business model" while forestalling "more significant — and potentially existential — threats, costs, and regulatory burdens targeting local restaurants in California.”

The truce caps years of political maneuvering in California as unions push to realize a long-deferred dream of organizing fast food workers. A decade after the franchise-focused “Fight for 15 and a Union” movement launched in New York, labor succeeded in boosting wages in California and other states but failed to win collective bargaining rights.

A breakthrough came in Sacramento last year, when SEIU California pushed through a bill creating an industry regulator — effectively achieving a form of sectoral bargaining, a type of industry-wide organizing that is more common in Europe.

What followed was a dizzying game of cat and mouse. Fast food corporations swiftly qualified a referendum, blocking the law until the 2024 election. SEIU responded by pushing a new bill that would impose joint liability on franchise chains — a provision that had been stripped out of last year’s law in a failed attempt at mollifying industry opposition. The union also quietly secured funding in the state budget for a defunct wage regulator that could have ordered pay increases.

The industry, meanwhile, has spent millions of dollars to derail the liability bill while dropping $50 million into its referendum effort, previewing a bruising campaign fight. The liability bill has been parked in committee since the summer as negotiations unfolded.

Assemblymember Chris Holden (D-Pasadena) said the impending ballot fight and the followup bill created the conditions for a compromise as talks intensified starting in August.

“I think that having that positioned to be on the ballot for a vote at the end of next year, and then having joint liability in a bill that was moving the Legislature, became a motivation for all parties to sit down and have an honest conversation,” Holden said in an interview.

Newsom helped clear the way to a deal on Friday by signing legislation allowing proponents to pull referendums from the ballot — an SEIU-backed bill to clamp down on what the union called industry abuses of the referendum process.