California’s$ 20 least wage for fast food workers became law Monday and immediately caused chaos, with pizza chains , preparing to reduce hundreds , of people, ice cream and snack shop franchisees , struggling , to learn if the law applies to them, and business leaders eyeing , cost hikes , in the state.
Governor of California Gavin Newsom ( D. ) signed more carve-outs for the law last week, which already exempted bakeries and chains from inside grocery stores, adding to the confusion over who has to file with the mandate.
The chaos over the law could deal a political blow to Newsom, who became the face of negotiating the$ 20 fast food wage as a” compromise” between unions and business interests. After a laborious and mysterious process, Newsom signed the bill last September, with criticism just beginning.
Who is subject to the law’s application is also vague. For instance, the owner of a franchise of ice cream has been asking Newsom and other state officials for months whether they are required to pay her$ 20 an hour to work mostly as part-time as a student at a high school and college, according to KCRA. The Democratic state legislator who wrote the law, who had been one of the most influential labor organizations in the state, directed her to the Service Employees International Union ( SEIU), which was the catalyst for the legislation’s passage, which finally ordered her to find a lawmaker to complete a new act exempting her.
” I think there’s going to be a great backlash”, the express commission’s Republican president James Gallagher said. The problem is simply making it more expensive to live in California.
Newsom’s office declined to comment, but a spokeswoman has told various shops that who’s subject to the law will finally be decided by the state workers judge’s company, a fast food committee made up of political appointees, and “potentially the courts”. The legislation’s author, Democratic assemblyman Chris Holden, did not respond to a request for comment. A comment request from the SEIU was not received.
Franchises are expected to begin paying their employees$ 20 an hour starting on Monday, and if they do n’t, they can be turned over to the state labor union in charge of enforcing the law. Many of these franchises are unaware of the law’s implications. For instance, it’s unclear if Panera Bread is exempt from the mandate despite claims that Governor Newsom negotiated a deal-out for chain bakeries to benefit a billionaire donor and former schoolmate who owns Panera franchises. After days of negative press, Newsom denied the report and insisted that Panera did n’t actually qualify as an exempted bakery, a claim that others in the sector disputed and will likely need to be litigated in court.
Chain ice cream parlors, pretzel counters, and doughnut shops are in the same boat.
Even though the federal government explicitly exempts such places from their definition of fast food restaurants, the state’s department of industrial relations, which is tasked with answering the pressing questions about the law, has released a fact sheet.
Keith Miller, a California Subway franchisee and consultant to other fast food franchises, said ultimately, even if owners find technical exemptions,” I do n’t think it’s a good feeling with your employees to say,’ I do n’t have to pay you$ 20.'”
Fast food prices are expected to rise, as fast food chains warned investors months ago, and there have already been widespread layoffs in the sector as a result of the law. Starting this month, pizza chains will permanently fire hundreds of workers, state records show. Jobs in California’s fast food sector fell by 1.3 percent from last September —when the law passed—to January of this year, the Wall Street Journal reported, compared to an overall 0.2 percent decline in private employment. This comes at a time when California has the highest unemployment rate in the country, which is 5.3 percent, according to the most recent federal statistics, and has experienced stagnant job growth in comparison to the rest of the nation.
The legislation” will demonstrate that the law of unintended consequences will always run amok—and get ready for amok,” said Michael Lotito, a California attorney and co-chair of the Workplace Policy Institute.
Lotito noted that the legislation was passed under SEIU pressure without any evaluation of how an unprecedented 25 percent minimum wage increase would affect food prices, labor costs, worker hours, hiring, business closures, and inflation.
When you’re in the fifth or sixth largest economy in the world, he said,” that’s probably not the right thing to do.”
Miller claimed that the legislation will examine whether the small franchise model is viable and that the state wo n’t likely be able to determine who can stay in businesses until leases are up. He noted that owners in California have been forced to maintain as little staff as possible due to the previous minimum wage increases, and it’s unclear how they will manage the higher costs now that additional price increases may not be financially viable given already high prices. The franchises ‘ revenue-share model allows the fast food restaurants to profit the most from higher food prices without having to pay higher labor costs.
” You’re enriching the corporation and driving out your local business owner”, Miller said.
