During the COVID-19 public health crisis, Newsom was perhaps the nation’s most aggressive governor in terms of grabbing executive powers — and using them in ways that often had little to do with the pandemic. One Republican lawmaker compiled a 138-page list of more than 400 executive actions that Newsom took. It sometimes required the courts to rein him in. Now he is taking a back-door approach to labor regulations that circumvents the democratic process.
Often functioning as a wholly owned subsidiary of the state’s muscular labor unions, Newsom continues to push far-reaching labor-rights laws that transfer power from private business owners to state officials. Last summer, he signed another “landmark” labor law that is based on the European model of “sectoral bargaining.” Assembly Bill 257 — known as the Fast Food Accountability and Standards (FAST) Recovery Act — creates a fast food council with 10 members appointed by the governor and our left-wing Legislature.
Per the Assembly analysis, the law would establish “sectorwide minimum standards on wages, working hours, and other working conditions related to the health, safety, and welfare of, and supplying the necessary cost of proper living to, fast food restaurant workers.” This new council could arbitrarily raise fast food wages to $22 per hour and impose the standards it chooses on large chain establishments. These restaurants are already struggling to find workers. It would provide another incentive to automate the fast food business.
That law is now on hold after the business community gathered enough signatures to place a referendum on the November 2024 ballot. This is how California’s system of direct democracy works: Opponents can place a new law on the ballot for a “yay” or “nay” vote. The law’s implementation is halted until the vote. But Newsom apparently isn’t as interested in the democratic process as he had suggested in his Southern tour.
Newsom’s New Law Will Burden Employers
As part of the complex (and not particularly transparent) negotiations over the recent budget, Newsom signed into law Assembly Bill 102. As the Associated Press reported, “[T]ucked inside California’s more than $300-billion operating budget is a provision to resurrect a long-dormant regulatory commission that would have powers similar to that of the fast food council.” The headline notes that lawmakers may have “found a way around” the referendum.
AB 102 is basically a long laundry list of appropriations bills that authorize spending on specific programs. Deep down the list, it includes this one:
Of the amount appropriated in Schedule (5), $3,000,000 shall be available for the Industrial Welfare Commission to convene industry-specific wage boards and adopt orders specific to wages, hours, and working conditions in such industries, provided that any such orders shall not include any standards that are less protective than existing state law.
California’s IWC was established in 1913 but defunded in 2004. Now it’s been refunded. “The reestablishment of the IWC portends new and more burdensome minimum wage, overtime, meal and rest period and related obligations for employers,” states the Society for Human Resources Management. It could “venture into new areas that have blossomed in the last 20 years in labor and employment law: joint employment, independent contractor status, predictive scheduling, leaves of absence and the like.”
For California’s progressives and unions, the economy should always be modeled on the factory floors of the early 20th century. That explains why their last “landmark” labor law, Assembly Bill 5, was a disaster. That measure banned most forms of independent contracting. It targeted ridesharing companies, such as Uber, but destroyed jobs throughout the economy — thus forcing the legislature to exempt more than 100 industries. Lawmakers ignored that most contractors prefer the flexibility these jobs offer.
As I explained in my American Spectator column last August, the FAST Act likewise misunderstands the ways the economy has changed:
The bill fundamentally misunderstands the nature of franchising, given that most fast food restaurants are local small businesses.… Backers of the bill argue that it will merely give workers a ‘seat at the table’ when negotiating wages and working conditions, but what it really means is giving unions the power to demand whatever it is they want at any given moment.
AB 257 will create a similar disaster for franchisees and their workers. At the very least, Newsom ought to have let the democratic process unfold. “By sneaking in a revival of the Industrial Welfare Commission (IWC) into the new budget, unions and lawmakers have found a way to circumvent the FAST Act ballot before voters have the chance to decide,” argued Tom Manzo, president of the California Business and Industrial Alliance, in the Orange County Register.
Call it what you want, but know that the governor’s sneaky end run is not a defense of democracy.