A late addition to the budget could stop a hard-fought opportunity for voters to have their say on a November 2024 ballot measure about the future of fast food in California.
The Industrial Welfare Commission (IWC), which was defunded by the legislature 20 years ago, is scheduled to resume next year after Gov. Gavin Newsom approved a $3 million allocation for it right before the budget was finalized earlier this summer. A revived IWC could introduce a new fast food wage framework just before the election.
The timing of the announcement and the IWC proposed timetable seems like a power grab, Tom Manzo, founder and president of the California Business and Industrial Alliance (CABIA) told the Northern California Record.
“They’re trying to come up with an end run around the ballot initiative,” Manzo said.
The Save Local Restaurants initiative on the 2024 ballot would overturn AB 257, also known as the FAST Act – a union-backed bill to create a Fast Food Council of state appointees and union leaders with wide authority to run quick-serve restaurants. The ballot measure qualified this past January after more than 1 million residents signed petitions, to counter what they say is the FAST Act’s government overreach.
The lack of transparency runs counter to the democratic process, Manzo said.
“It's like they're thumbing their nose in our faces, saying we don't care about the voters,” Manzo said. “It isn’t fair to voters; it takes away their privilege to have influence in the democratic process.”
No one is assuming the hard-fought battle over AB 257 will be decided by unilateral government edict, slipped in to the budget without an opportunity for stakeholder input. Still, Matt Haller, president & CEO of the International Franchise Association, called the budget bill undemocratic and a shameful attempt to silence California voters. “This is a clear backdoor attempt being pushed by special interests to undermine the more than one million California voters concerned about the cost of living who referred AB 257’s Fast Food Council to the ballot next year,” Haller said in a news release.
Quick-serve is a weekly staple for roughly 70 percent of Californians, and concerns have centered on the increase in costs for consumers.
The California Retailers Association (CRA) is part of the business coalition speaking out in opposition to the state’s unilateral IWC action.
“It's something that was not vetted through the legislative process,” Rachel Michelin, CRA president and CEO, told the Record.
“When you look at it, there's a direct correlation with the referendum. But it flies in the face of letting voters decide,” Michelin said. “I candidly think, let voters decide. It's qualified for the ballot, so let voters make that decision. But this is something that's important to certain groups, and so they're going to do whatever they can to try to impact that outcome next November.”
Before any of that, Burger King is already slated to close 400 locations before the end of this year.
Business and union priorities have long diverged, but a top national restaurant association has also described entire litigation budgets monopolized by California’s laws and regulations.
It’s unclear what the payoff is as locations also look at AI for industry support.
The ballot measure effort began after Newsom signed AB 257 into law a year ago. Ballot measure supporters want better transparency when it comes to how McDonald’s and other restaurants work in California, specifically whether they should be governed by unelected board members instead of the employers that created and run daily operations.
“We’re waiting to see how it unfolds,” Michelin said. “But it is always challenging when there’s another layer of government that you have to work through.”
Carl’s Jr. and In-n-Out Burger are among the California restaurants expanding elsewhere, with Carl’s Jr. moving its headquarters to Tennessee a few years ago and In-n-Out scheduled to open an Eastern Territory office there.