New California law could raise fast-food minimum wage to $22 an hour

By Cheri Mossburg and Danielle Wiener-Bronner, CNN Business

In a move the restaurant industry warns could raise fast-food prices, California’s governor signed into law a bill creating a “Fast Food Council” to determine standards for pay, hours, and working conditions for the state’s fast food workers.

Under the legislation, the council could raise the minimum wage for fast food workers to up to $22 an hour — well above the $15 an hour in the state for employers with more than 26 workers.

The new standards apply to chains with at least 100 locations nationally.

“Today’s action gives hardworking fast-food workers a stronger voice and seat at the table to set fair wages and critical health and safety standards across the industry, “said Governor Gavin Newsom, who is also a restaurant owner. “I’m proud to sign this legislation on Labor Day, when we pay tribute to the workers who keep our state running as we build a stronger, more inclusive economy for all Californians.”

But the restaurant industry has spoken out against the law. Last week, McDonald’s USA President Joe Erlinger called the legislation “lopsided, hypocritical, and ill-conceived.” He believes the creation of the council will “hurt everyone” because the new standards will apply to large restaurant chains, and not to those with fewer than 100 locations.

The International Franchise Association also took issue with the bill, calling it a “discriminatory measure designed to target the franchise business model.”

IFA president and CEO Matthew Haller said in a statement that the bill would hurt smaller franchise operators and pointed to a study that suggested higher wages could lead to 20% increases in menu prices. The National Restaurant Association is also against the bill.

But dozens of advocacy groups including the Economic Policy Institute, the National Employment Law Project and One Fair Wage urged the state in January to pass the bill.

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