On April 28, 2022, in San Leandro, California, a sign was posted in front of a McDonald’s restaurant.
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The US head of McDonald’s on Wednesday publicly criticized a groundbreaking California law that would give the state more control over the wages of fast food workers, saying it is unfairly targeting large chains.
The comments from McDonald’s US president Joe Erlinger come after the California Senate passed a bill earlier this week that would give a 10-member council the power to raise the industry’s minimum wage to $22 an hour for chains with over 100 locations nationwide. The current pay floor in California is $15.50 per hour. The council would also have the power to set security conditions.
Proponents of the bill say it will empower fast food workers and help solve industry problems such as unsafe working conditions and wage theft, including not paying employees for overtime. But the FAST Act is facing strong opposition from the restaurant industry, which fears the impact on California restaurants and the example it sets for other states.
“It imposes higher costs on one type of restaurant while sparing another. That’s true, even if those two restaurants have the same income and the same number of employees,” Erlinger wrote in a letter on the company’s site on Wednesday.
For example, Erlinger said a two-location McDonald’s franchisee would be subject to the bill because it’s part of a large national chain. But he said the owner of 20 restaurants that are not part of a chain would be exempted.
“Aggressive pay increases aren’t bad… But if it’s essential to raise restaurant workers’ wages and protect their well-being — and it is — shouldn’t all restaurant workers benefit?” Erlinger wrote.
It’s rare for McDonald’s to speak out publicly against state law, though the chain is reportedly pushing its franchisees to lobby against California law. According to Citi Research, nearly 10% of McDonald’s US restaurants are located in California.
McDonald’s operates only about 5% of its more than 13,000 US locations. The franchisees manage the rest, but the chain often lobbies on their behalf. In 2019, McDonald’s told the National Restaurant Association it would no longer oppose federal, state or local minimum wage increases.
Other restaurant companies are also fighting the bill. State records show that Chipotle Mexican Grill, Chick-fil-A, Yum Brands and Restaurant Brands International are among the chains that have spent money to lobby California lawmakers to oppose the legislation.
The National Restaurant Association, an industry group, has also spent at least $140,000 fighting the bill, according to California records. The organization’s president, Michelle Korsmo, said in a statement that 45% of California restaurant operators report that business conditions are worse today than three months ago.
“The FAST Act will not achieve its goal of providing a better environment for the workforce, it will force the results our communities do not want to see,” she said.
A stricter version of the FAST Act that would hold franchisors like McDonald’s liable for their franchisees’ labor violations was passed by the California State Assembly. But the number of amendments made to the Senate bill means the bill will have to be voted on again in the assembly or reconciled before it can make its way to Governor Gavin Newsom’s desk.
Newsom has not indicated whether he will sign or oppose the bill, although his Treasury Department opposed the bill’s original draft.