An In-N-Out location is seen on Calle Real in Goleta in 2021. A law intended to regulate the fast food industry has been suspended until the November 2024 election following a lawsuit by a coalition of restaurant advocates.
By RIA ROEBUCK JOSEPH
THE CENTER SQUARE CONTRIBUTOR
(The Center Square) – On Dec. 29 2022, a coalition of restaurant advocates filed a lawsuit to suspend the implementation of the FAST Act (AB 257) that was due to take effect on Jan. 1. The Save Local Restaurants Coalition, consisting of the U.S Chamber of Commerce, the National Restaurant Association and led by the International Franchise Association, collected more than 1 million petition signatures to prevent the law from going into effect, thereby meeting the state’s referendum requirements to bring the measure before the public for a vote.
The International Franchise Association announced Jan. 25 that “the FAST Act has been officially postponed until the November 2024 election.”
“We’re pleased that Californians will get the chance to exercise their constitutional right to vote on this law and will continue to support the operators, small business owners, and workers that make the restaurant industry so important to our customers’ lives,” National Restaurant Association Executive Vice President for Public Affairs Sean Kennedy said.
Governor Gavin Newsom signed the Fast Food Accountability and Standards Recovery Act on Sept. 5, 2023 which would have created a 10-person council – two fast-food franchisors, two franchisees, two employees, two advocates of workers rights, one representative from the Department of Industrial Relations, and one from the Governor’s Office of Business and Economic Development – to review employment standards and increase minimum wage by 3.5% every year and up to $22 per hour in 2023.
The bill drew strong reaction from local restaurants who feared the bill would jeopardize their livelihoods and impact more than half a million workers across the state.
In an evaluation of California’s minimum wage increases over 30 years, reported by the Employment Policies Institute, Dr. David Macpherson of Trinity University and Dr. William Even of Miami University examined the observant effects of rising minimum wages in California from 1990 to 2020. Dr. Macpherson and Dr. Even looked at 24 counties and 15 industries studying the impacts of an increasing minimum wage on private-sector employment across county-industry pairs. The researchers poured over three decades of data using 24 unique variations to their original model to ensure that the treatment of the evidence was fair and reasonable.
The economists found that employment in industries with high volumes of lower-paid employees, led to a reduction of 5% of employees for every 10% increase in minimum wage, and across all industries i.e. those not necessarily requiring high volumes of lower paid employees, a 10% increase reduced employment for 2% of the workforce.
“Industries with the greatest number of affected employees are most severely affected by job loss, according to Even and Macpherson; nearly half of the observed job loss occurs in foodservice and retail industries,” the report read.
Mr. Kennedy said, “The FAST Act is bad policy that threatens not only quick service restaurants, but the independents operating in the same neighborhoods. There is no way that the regulations passed by this unelected council would not damage the state’s restaurant industry, harm its workforce, and leave diners paying the bill.”
The institute report seems to confirm this. “What is not in dispute based on this study,” the report read, “is that California’s rising minimum wage has depressed employment opportunities in the most heavily impacted industries.”
The coalition hopes that the referendum could allow for time to protect workers, consumers and restaurant owners from the most dire effects of the bill by informing voters of its damaging impacts.
“Employers, workers, and consumers can take heart that the FAST Act has been put on hold permanently through November 2024. Had this ruinous policy gone into effect, not only would food prices rise and jobs be lost, but big labor would already be exporting it to other states and industries. In 2024, California’s voters will have the opportunity to put a stake into this law and save local restaurants,” U.S. Chamber of Commerce Senior Vice President of Employment Policy Glenn Spencer said.
The FAST Act law would apply to restaurant brands with 30 or more locations nationwide affecting coffee shops, ice-cream and frozen yogurt parlors, salad bars, justice and smoothie counters, bakeries, delis, pizzerias and fast food restaurants. Research on the bill led by Democratic strategists Will Gudelunas and Matt Rodriguez, concluded that 61 percent of California voters believe that the Food Sector Council would cause food prices to rise and 75 percent of voters would frequent these restaurants less often if prices increased. In fact, less than one third of California voters support the bill according to the poll.
The Save Local Restaurants coalition, having met the required signature collection for the referendum stated:
“California voters have made clear that they want a say on whether they must shoulder the burden of higher prices and job losses caused by the FAST Act. This legislation singles out the quick service restaurant industry by establishing an unelected council to control labor policy, which would cause a sharp increase in food costs and push many Californians, particularly in disenfranchised communities, to the breaking point. During the highest inflation in more than four decades, consumers want to know that the restaurant meals they need in their busy lives will continue to be affordable, and that the jobs their communities rely on will still be there. Before they lose the brands that they love, voters will get the chance to have their say.”
