A sign is placed outside a McDonald’s restaurant on April 28, 2022 in San Leandro, California.
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The head of McDonald’s USA on Wednesday publicly criticized a landmark California bill that would give the state more control over pay for fast-food workers, saying it unfairly targets the big chains.
The remarks by Joe Erlinger, president of McDonald’s USA, come after the California state Senate earlier this week passed a bill that would give a 10-person board the power to raise the industry’s minimum wage to $22 an hour for chains with more from 100 locations across the country. The current wage threshold in California is $15.50 an hour. The council will also have the power to establish safety conditions.
Supporters of the bill say it would empower fast-food workers and help address problems in the industry such as unsafe working conditions and wage theft, which can include not paying employees for overtime. 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.
“It 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 posted on the company’s website Wednesday.
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 non-chain restaurants would be let go.
“Aggressive wage increases aren’t bad … But if it’s essential to increase restaurant workers’ wages and protect their welfare — and it is — shouldn’t all restaurant workers benefit?” Erlinger wrote.
It’s rare for McDonald’s to speak out publicly against state legislation, although the chain reportedly urged its franchisees to lobby against the bill in California. Nearly 10 percent of McDonald’s U.S. restaurants are located in California, according to Citi Research.
McDonald’s operates only about 5% of its more than 13,000 locations in the US. Its franchisees manage 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 raising the federal, state or local minimum wages.
Other restaurant companies are also fighting the bill. Chipotle Mexican Grill, Chick-fil-A, Yum Brands and Restaurant Brands International are among the chains spending money to lobby California lawmakers to oppose the legislation, state records show.
The National Restaurant Association, an industry group, 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 percent of California restaurant operators 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 the outcomes that our communities do not want to see,” she said.
A tougher version of the FAST Act, which would make franchisors like McDonald’s liable for their franchisees’ labor violations, has passed the California state assembly. But the number of changes made to the Senate version means the bill will have to be re-voted in the Assembly or reconciled before it reaches Gov. Gavin Newsom’s desk.
Newsom has not indicated whether he will sign or veto the bill, although his Treasury Department opposed the original version of the bill.
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