The head of McDonald’s in the United States on Wednesday publicly criticized a landmark California bill that would give the state more control over the wages of fast-food workers, saying it unfairly targets big chains.
The remarks by Joe Erlinger, chairman of McDonald’s US, come after the California State Senate earlier this week passed a bill that would give a 10-person board the power to raise the minimum wage for the industry up to $22 per hour for channels at 100+ sites nationwide. California’s current wage floor is $15.50 per hour. The council would also have the power to establish security conditions.
Proponents of the bill say it will empower fast-food workers and help address industry issues such as unsafe working conditions and wage theft, which may include unpaid hours additional to employees. But the FAST Act faces strong opposition from the restaurant industry, which fears the impact on California restaurants and the example it sets for other states.
“This imposes higher costs on one type of restaurant, while sparing another. This is true even if these two restaurants have the same revenue and the same number of employees,” Erlinger wrote in a letter published Wednesday on the company website.
A sign is displayed outside a McDonald’s restaurant on April 28, 2022 in San Leandro, California.
Justin Sullivan | Getty Images
For example, Erlinger said a McDonald’s franchisee with two locations would be subject to the bill because it is part of a large national chain. But he said the owner of 20 restaurants that are not part of a chain would be exempt.
“Aggressive wage increases are not bad. … But while raising the wages of restaurant workers and protecting their well-being is essential – and it is – all workers in the restoration should they not benefit?” Erlinger wrote.
McDonald’s rarely speaks out publicly against the state legislation, though the chain reportedly pushed its franchisees to lobby against the California bill. Nearly 10% of US McDonald’s restaurants are located in California, according to Citi Research.
McDonald’s only operates about 5% of its more than 13,000 locations in the United States. Its franchisees own the rest, but the chain often lobbies on their behalf. In 2019, McDonald’s told the National Restaurant Association that it would no longer oppose federal, state, or local minimum wage increases.
Other catering companies also fought the bill. State records show Chipotle Mexican Grill, Chick-fil-A, Yum Brands and Restaurant Brands International are among the chains that have spent money lobbying California lawmakers to oppose the legislation.
The National Restaurant Association, an industry group, also spent at least $140,000 to meet the bill, according to California records. The organization’s president, Michelle Korsmo, said in a statement that 45% of California restaurant owners report that business conditions are worse today than they were three months ago.
“The FAST Act will not achieve its goal of providing a better environment for the workforce, it will force results that our communities don’t want to see,” she said.
A tougher version of the FAST law that would make franchisors like McDonald’s liable for their franchisees’ labor violations has passed the California State Assembly. But the number of changes to the Senate version means the bill will have to be voted on again in the Assembly or reconciled before it can make it to Governor Gavin Newsom’s office.
Newsom has not indicated whether he will sign or veto the bill, although his finance ministry opposed the initial version of the legislation.