California’s fast food worker struggle: Opportunities and limitations of sector-based policy for addressing racial and gendered disparities
By Paulina Campos
California is known as a hub for innovation, and the fast food industry is no exception. Some of the most popular chain restaurants in the country were founded in the Golden State, including McDonald’s, Jack in the Box, and Taco Bell. Despite the immense success of these businesses, and recent record profits (Kilgore, 2023), California’s fast food workers are consistently underpaid and mistreated. Years of organizing by workers and advocates, however, has resulted in a recent victory with the passage of AB 1228. The bill not only raises the minimum wage to $20 for employees of large chain restaurants, but also establishes a unique industry council with wage-setting powers. These measures can advance gender equality by increasing wages and providing representation for a workforce largely made up of women of color. Nonetheless, the bumpy road to the bill’s passage revealed the unwavering power of business interests to shape legislation. As a result, the bill falls short by failing to address issues of corporate liability in the franchise business model that perpetuate the exploitation of workers and franchisees.
Governor Gavin Newsom signed AB 1228 into law in September of 2023, surrounded by workers, advocates, and a “Si Se Pudo!” (Yes, it could be done!) banner. The bill established a $20 minimum wage for employees at fast food restaurants that have 60 or more locations nationwide. This represents a $4 increase from the $16 statewide minimum wage and took effect on April 1, 2024 (Kuang, 2023). In addition to the wage increase, the bill also established the Fast Food Council, a first-in-the-nation body that will bring together labor and industry representatives to discuss working conditions and wages. Decisions made by the Council, including standards, rules, and regulations, will be brought to the state’s Labor Commissioner and other agencies for approval.
AB 1228 is the result of years of advocacy by workers and organizers as well as compromise with fast food industry leaders. The bill was preceded by AB 257, or the FAST Recovery Act, which would have boosted the minimum wage to $22 an hour and established a slightly larger and more powerful version of the Fast Food Council (Kuang, 2023). Soon after this first bill had passed in 2022, a franchise-owner interest group called Save Local Restaurants collected enough signatures to initiate the referendum process, which would have put the issue on the ballot in 2024 (Zaller, 2023). The Department of Industrial Relations intended to enforce the law in the meantime, until the Superior Court of Sacramento ordered the department to halt enforcement until the referendum vote took place. To avoid a costly political battle, AB 1228 was passed as the result of an agreement between labor advocates and industry representatives, and its passage ended the referendum process for AB 257. While the resulting legislation is an important step forward for improving the material conditions of workers, some powerful provisions were removed or amended throughout this volatile political process.
By raising wages for all fast food workers, AB 1228 promotes gender equity by addressing the needs of women who have historically been left out of the mainstream feminist movement and have not benefited equally from white, liberal feminist policy in California. As Michener and Bower (2020) point out, “the intersecting categories of race and gender are systematically associated with wide disparities in economic outcomes.” This truth is stark in California, where women of color lag far behind their white counterparts. While all women working full-time and year-round in the state earn 89 cents for every dollar earned by a man, this figure is only 61 cents for Black women and 44 cents for Latinas (National Women’s Law Center). The latter is 13 cents below the national average for Latinas and has remained around this level for nearly two decades. This disparity is especially concerning when Latinas make up 20% of the state’s population and 39% of the state’s women (Moreno, et al., 2022). These disparities exist even though California enacted the country’s strictest equal pay law in 2015 (Masunaga, 2015). However, this solution has not benefited all women in California equally.
Michener and Bower’s research emphasizes the need to evaluate how economic policies impact different groups of women disparately, rather than solely looking at the resulting differences between women and men. This intersectional approach to evaluating policies meant to address economic inequality can make visible the blind spots that have resulted in stagnating progress in closing the gender wage gap. Despite AB 1228 not being touted as a solution to the gender wage gap by mainstream feminist advocates, it has the potential to improve the economic conditions of thousands of women and is a step toward closing the racial and gender wage gap.
Of the 500,000 fast food workers in California, 80% are people of color and 68% are women (Taube, 2022). Across all industries, more than half of low-wage workers in California are women. Meanwhile, women make up only 26% of California’s technology workforce, one of the state’s most lucrative industries, with Hispanic or Latino workers at 12% and Black workers at just 3% (CompTIA, 2023). A law like California’s Equal Pay Act, which requires an employer to compensate employees fairly for the same work, is not going to address the pay disparities between different industries caused by occupational segregation. A fast food employer may be paying their male and female employees equally, but that does not change the fact that wages in the industry are systematically lower than wages in white- and male-dominated industries like technology or finance. In fact, fast food is one of the lowest paid industries in California, with 28% of workers living below 150% of the federal poverty level compared to 12% of all workers in the state (Taube, 2022). By lifting wages for all workers in this industry dominated by women of color, AB 1228 is addressing a blind spot of broader equal pay policies.
AB 1228 also promotes gender equity by giving workers an opportunity to have their voice heard and interests represented through the Fast Food Council. The Council is made up of two employees, two labor advocates, two restaurant operators or franchise owners, two industry representatives, and one chairperson who must be unaffiliated with the fast food industry. The group will meet at least every six months and has the power to adjust the hourly minimum wage each year and recommend workplace standards (but not enact them directly). This is a recognition of years of effort by labor organizers, particularly those involved with the wage justice organization Fight for $15. In fact, Anneisha Williams, a fast food worker and Fight for $15 leader, has been appointed by Newsom to serve on the Fast Food Council. The other worker representative on the council is also a woman of color (Angelica Hernandez, a Cook Trainer at McDonald’s since 2012). In addition to the Council, the Fight for $15 organizers have established a new, unique type of union called the California Fast Food Workers Union. While this is not an official union recognized by the National Labor Relations Board, it is a milestone in the industry’s fight for worker’s rights. This union builds on the organizers’ momentum and provides a forum for workers to gather their concerns and organize demands to present to the Council.
The Council, as well as the new union, is especially notable in the fast food industry, which is notoriously difficult to organize. One reason for this is the tendency of workers to not stay at one job for long. In fact, industry analysts estimate employee turnover rates at more than 100% (Rosenbaum, 2019). Furthermore, the franchise ownership model means that each individual restaurant has a different owner to confront and negotiate with, rather than a singular corporate entity. The precarious economic situations of many fast food workers also discourage them from risking job loss or other forms of retaliation. The bill seeks to address this issue to some degree through an anti-retaliation clause to protect employees who are appointed to the Council. Finally, Kira Sanbonmatsu (2020) cites “Gender roles in society, the sexual division of labor, and racial and ethnic inequalities” as barriers to women’s political participation. Fast food workers may be working multiple jobs, caring for children, and running the household, leaving little time and energy to devote to organizing their workplace. With these barriers in mind, it is even more impressive that fast food worker-organizers have achieved this legislative victory, including the opportunity to have their voices heard in a formal capacity. However, these same barriers can possibly limit the effectiveness of worker and labor representatives on the Council, who will be facing industry representatives with immense resources.
One area in which AB 1228 falls short is in its failure to address the pitfalls of the broader franchise business model, which dominates California’s fast food industry. A previous version of the bill included a provision that would have established joint employer liability between franchisors and franchisees. However, strong opposition from industry groups including the International Franchise Association eventually led to its demise. This provision would have been a major shift in the current power imbalance present in the franchise model that hurts both franchisees and workers. This business model, employed by companies like McDonald’s and Taco Bell, allows parent companies to reap the benefits of owning hundreds of restaurants, without the responsibility of employing the workers that make the whole operation possible. As UC Berkeley labor professor Catherine Fisk explains in an editorial for CalMatters (2022), major brands dictate how franchise owners must operate nearly every aspect of the restaurant except for labor and employment. This means that when franchise owners need to cut costs, labor is the only area where they have any leeway to make changes. This results in owners keeping wages low, committing wage theft, or cutting corners on maintaining safe working conditions – and leaves employees without adequate legal recourse. Professor David Weil defines these increasingly common arrangements as “the fissured workplace,” and argues that it has resulted in “declining wages, eroding benefits… and ever-widening income inequality” (Weil, 2017).
Despite these highly negative consequences, the franchise model has been continuously legitimized in the courts. Andrele Brutus St. Val, an assistant professor at the University of Pittsburgh School of Law, has pointed out that McDonald’s has successfully argued that it “has no direct control over employees,” meanwhile the company explicitly dictates the hiring practices of its franchise operators (Pauly, 2021). Even with contradictory arguments such as these, courts have upheld that McDonald’s does not meet the definition of an employer and is not responsible for employee complaints of wage theft, sexual harassment, and more. This is a sign of “legal endogeneity, which posits that institutionalized organizational structures work their way into judicial conceptions of organizational rationality and regulatory compliance” (Edelman, et al., 2011). This is seen in the results of several class action lawsuits related to sexual harassment against McDonald’s. In 2022, despite the case being filed against a Mason, MI, franchisee as well as McDonald’s, it was only the franchisee who paid $1.5 million in damages while the McDonald’s corporation was excused from the case (ACLU, 2022). Although this is surely a positive outcome for the victims of harassment at the hands of a negligent business owner, it maintains a lack of accountability from McDonald’s and incentivizes the corporation to continue shirking responsibility for labor violations at its restaurants.
As a result of the joint employer provision’s removal, as well as other compromises that weakened the rulemaking power of the Fast Food Council, AB 1228 does not adequately address the oppressive working conditions faced by fast food workers. These include wage theft, retaliation, unsafe working conditions, unpredictable schedules, and heightened exposure to violence and sexual harassment. The 2022 California Fast-Food Wage Theft Worker Survey found that 85% of the 410 workers surveyed have experienced wage theft, and “nearly one-third of workers have been retaliated against for asking to be paid properly, taking a sick day, or asking to be paid for a sick day” (Taube, 2022). The most common forms of wage theft were paid sick leave violations, followed by rest break or meal break violations. McDonald’s employee Seberiana Reymundo, for example, did not receive sick pay even when she was receiving treatment for liver cancer. Those who experienced retaliation from an employer often had their work hours cut, which is an even more serious problem for the many workers whose hours are not sufficient to begin with (Justie, et al., 2022). A study of fast food workers in Los Angeles during the COVID-19 pandemic found that “well over half have faced health and safety hazards on the job, amounting to injuries for 43% of workers” (Justie, et al., 2022).
One hazard that disproportionately impacts women on the job is sexual harassment. A study of 1,200 fast food workers found that 40% of women surveyed had experienced sexual harassment on the job (National Partnership for Women and Families, 2023). However, other surveys of the restaurant industry at large estimate this figure to be as high as 90% (Johnson, 2021). Workers in the service industry are forced to accept some level of harassment from customers due to the “customer is always right” attitude, and certain levels of sexual harassment can be viewed as an unavoidable part of the job (Johnson, 2021). In their research on global policies enacted to combat violence against women, Mala Htun and Francesca R. Jensenius (2020) state that “the existence of laws…” addressing “sexual harassment does not mean that people comply or that state authorities enforce them.” Although California’s Fair Employment and Housing Act is meant to protect employees from sexual harassment, the reality is that employees in the fast food industry and beyond are not adequately protected at work, and many are without reliable reporting methods without fear of retaliation. Following a flurry of lawsuits related to sexual harassment, McDonald’s promised that it would roll out new required training and reporting processes for all locations by January 2022, but that date came and went with no update from the company (Covert, 2022). The fact that AB 1228 does not increase accountability measures for employers or strengthen methods of enforcement of existing sexual harassment policy leaves much work to be done to ensure safe conditions for fast food workers.
AB 1228 is a unique approach to addressing issues of gender equality in California by raising wages in an underpaid sector overrepresented by women of color and providing those women with an opportunity to have a say in their wages and working conditions. However, the bill stops short of making structural changes that could have a more definitive and immediate impact on working conditions. These shortcomings are largely a result of business interests fighting to remove the joint employer liability provision for franchises and limiting the power of the Council to make recommendations rather than directives. While the bill’s sector-specific approach is effective in its ability to address the needs of workers in a particularly egregious industry, its usefulness is limited without making changes to larger mechanisms of accountability and enforcement.
To address the continued oppression of women of color in the fast food industry, the following recommendations should be prioritized. First, yearly wage increases should reflect the ever-increasing cost of living in California, especially because the $20 minimum wage granted by this bill is still not sufficient for most workers to get by (MIT, 2024). Lawmakers must also ensure state capacity to enforce regulations and investigate labor violations, especially instances of wage theft which will diminish the impact of the wage rise. Another way to address this issue is to hold franchisors accountable by establishing joint employer liability. Further legislation focused on the needs of this specific industry should more explicitly consider the unique needs of women of color, immigrant women, mothers, LGBTQ+ workers, and others who are overrepresented in the industry and/or are particularly vulnerable to workplace abuses. Finally, the Fast Food Council should continue to be improved upon in a way that empowers workers. It will be important to monitor how Council decisions and worker recommendations are handled in the Council’s first years to assess if worker input is being taken seriously and translating to workplace regulations. Legislators might consider ways to organize the Council to account for the disproportionate amount of financial and other resources held by industry representatives compared to workers and labor representatives. The insights collected from workers and labor representatives on the Fast Food Council can also inform future labor policies in the fast food industry and other similarly situated industries.
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