California's Fast-Food Council Will Give Workers a Voice in Industry Regulation. So, What Happens Next?

Before California’s fast food workers get a minimum wage hike to $20 an hour in April, the state will grant them another historic avenue to advance their interests.

A first-in-the-nation fast food council will offer workers and labor advocates a way to set industry working conditions, hammering out rules directly across the table from franchise owners and representatives of restaurant chains such as McDonald’s and Burger King.

The council is supposed to start meeting by March 15, and its decisions will be sent to state labor agencies to decide if they’ll become real regulations. Gov. Gavin Newsom will have a hand in how the discussion plays out: He’s responsible for appointing seven of the council’s nine members; legislative leaders will appoint the other two. The positions are unpaid, except for $100 per day for council business.

The council will be split, 4–4, between business and labor. Newsom will pick the chairperson, who is “unaffiliated” with fast food businesses or workers — and could end up regularly being a tie-breaking vote. The governor’s office is interviewing applicants now, a spokesperson said.

Labor advocates see the council as a way to decide workplace standards in an industry with scant union representation and multiple kinds of companies involved — including the franchise owners who employ the workers and the large chains that dictate various aspects of production.

In recent years, the labor movement has also sought industry-wide councils for nursing home workers in Minnesota and nail salon workers in New York, borrowing from a European bargaining method with employers uncommon in the U.S.

California is the first to convene a council for fast food, a sprawling industry employing mostly workers of color and women, who earn on average less (PDF) than those in other service sectors. More than 500,000 people are employed in more than 30,000 limited-service restaurants in California, according to federal data; the council will govern those that belong to chains with 60 or more locations nationally.

The council, said SEIU California president David Huerta last year when Newsom signed the law creating it, puts “power in the hands of workers to improve conditions across their entire industry.”

It’s also a five-year experiment in how to regulate businesses in general across California — by returning to a model from the past.

For most of the 20th century, the state’s now-dormant Industrial Welfare Commission — a similar but more powerful council with labor and business representatives — convened wage boards specific to certain industries. The boards took testimony from workers and employers and wrote work standards in those industries.

Lawmakers did away with the commission two decades ago after unions complained it had been seized by business interests to pass regulations that were less protective of workers’ rights. Now, labor laws are almost all passed by the Legislature, which former commissioners from both business and labor say is less responsive to an industry’s specific needs.

Though business groups have pushed back on the idea of industry-specific labor boards, lawmakers have signaled they’re interested. Last year, during negotiations between the fast food industry and labor groups, the Legislature briefly resurrected the old commission, with a focus on industries with high levels of worker poverty.

“It is likely we’ll see a continued push for both more sectoral labor standards” such as minimum wages specific to the fast food or health care industries, said UC Berkeley Labor Center co-chairperson Ken Jacobs, “as well as the use of labor standards boards in certain industries, where the structure of the industry makes traditional collective bargaining more difficult.”

Former industrial welfare commissioner Barry Broad, a former lobbyist for unions who now sits on the state’s Agricultural Labor Relations Board, recalls convening wage boards that would discuss specifics such as tipping practices in hospitality jobs, the length of shifts in nursing and how cement mixers almost universally took lunch breaks in the cabs of their trucks. He sees promise in creating such a forum that gets deep into details for fast food work or other sectors.

“When you have something which is industry-specific like this …  you’d get a consensus about how the work was organized and what the customs were” across that industry, Broad said in an interview. “There was a common understanding, and it led to compromise.”

More fights ahead?

But after more than two years of a dizzying political fight between business and labor over whether to even consider specific regulations for fast food, will the new council result in more of the same battles?

Broad said it’s possible to reach a consensus, depending on who gets on the council.

But his former colleague, Bill Dombrowski, a representative of employers on the industrial commission, remembered its meetings as being just as contentious as the business-labor fights of today.

“We jokingly referred to it as the Industrial Warfare Commission,” Dombrowski said, though he agreed that the process was preferable to business and labor going through the Legislature.

Appointed by then-Democratic Gov. Gray Davis, Dombrowski said he understood the commission would push through labor-friendly policies Davis had backed, such as returning to a rule of paying workers overtime for time beyond eight hours a day. But his role was to “try to make it as business-friendly as you can.”

In the fast food industry, however, business groups aren’t happy to be coming to the table, and they’re likely to cite costs to push back on any new proposed regulations.

Restaurant owners are already wary of the upcoming wage hike.

In December, two Pizza Hut franchise operators notified the state they were eliminating delivery services and, in February, will lay off more than 1,100 drivers, mostly in southern California. The cuts will take place two months before the $20 minimum fast-food wage goes into effect. (The statewide minimum wage ticked up to $16 on Jan. 1.)

The layoff notices (PDF) did not mention the new law, but Jeff Hanscom of the International Franchise Association, which backed the deal leading to the fast food council and the wage hike, said restaurant owners across the state are considering whether it’ll prompt them to do the same.

“We have said all along that you can’t have a double-digit percentage increase in wages overnight and not expect there to be repercussions,” he said.

The law creating the council has also drawn the ire of many other restaurant owners, who are just now learning they’ll be included under any new rules — including the wage hike, said Matt Sutton, senior vice president of government affairs and public policy for the California Restaurant Association.

When business and labor agreed on the scope of the council last year, they included restaurants belonging to a chain of 60 or more locations nationally; a prior version of the law covered those in chains with 100 or more locations.

“There’s a lot of people that are caught off guard,” Sutton said, predicting restaurants not covered by the law and other businesses will also be pressured to raise wages. “That is going to have a tremendous shock.”

How will the council work?

The fast food council, having undergone significant changes since SEIU first proposed it in 2021, won’t be as sweeping or as powerful as the old industrial commission, which created new regulations directly.

After pushing the proposal through the Legislature in 2022 and then being subject to a multimillion-dollar industry campaign to repeal it at the ballot box, labor groups ultimately ended up last fall with a wage hike for workers and a more limited council. The industry, in turn, agreed to withdraw the referendum from the November 2024 ballot.

There are some workplace issues the council can’t touch, including creating any rules requiring employers to give workers more paid time off or requiring businesses to adopt predictable scheduling policies.

Outside of minimum wages, most rules passed by the council would head to the state’s labor agencies, which could still revise them through the regular rulemaking process before making them law. That was a win for the employers, said Hanscom of the franchise association, which represents both franchise owners and fast food brands.

“We want to ensure that the council is simply not a rubber stamp for” labor groups, Hanscom said. “We want to ensure that there’s a counter-voice.”

Meetings will be public and held at least once every six months. With the first meeting scheduled in less than two months, there are few other details public about who will be on the council and what it will discuss.

It will be part of the Department of Industrial Relations, a state labor agency. Newsom will appoint two fast food workers, two franchise owners, two fast food corporate representatives and the neutral member of the public. The two other spots, filled by legislative leaders, are reserved for workers’ advocates.

Newsom’s office did not respond to questions about what he’s looking for in appointees.

A former “public member” of the old industrial commission, ex-U.S. Rep. Doug Bosco, said he wasn’t the tie-breaking vote as often as he expected. “It was quite reasonable and quite centered and balanced, and not impervious to the political whims but not beholden to them either,” he said.

Still, when asked how a neutral member should run the fast food council, he chuckled and said: “Don’t take the job.”

The council will also include non-voting representatives from the Department of Industrial Relations and the Governor’s Office of Business and Economic Development.

No appointees have been announced yet, and business groups have been mum on who they’re pushing for the seats. On the labor side, Maria Maldonado, statewide leader of efforts to organize fast food workers through the Fight for 15 campaign, said she’s interviewed with the Legislature for a workers’ advocate seat.

“We’re going to have a democratic process where (workers) can raise issues and talk about solutions,” she said. “I hope that we can really convince (businesses) that we need to work together.”

Whether on the council or as a future advocate at its meetings, Maldonado said her first goal would be to “protect the workers’ hours” from getting cut in response to the wage hikes.