The bill would create a new 10-member Fast Food Council with equal numbers of workers' delegates and employers' representatives, along with two state officials, empowered to set minimum standards for wages, hours and working conditions in California.
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A late amendment would cap any minimum wage increase for fast food workers at chains with more than 100 restaurants at $22 an hour next year, compared to the statewide minimum of $15.50 an hour, with cost of living increases thereafter.
"We made history today," said Service Employees International Union President Mary Kay Henry, calling it "a watershed moment."
"This legislation is a huge step forward for workers in California and all across the country," she said as advocates offered it as a model for other states.
The Senate approved the measure on a 21-12 vote, with no votes to spare and over bipartisan opposition. That sends it to the Assembly for final action before lawmakers adjourn on Wednesday. Assembly members previously narrowly passed a broader version of the bill.
Debate split along party lines, with Republicans opposed, although three Democrats voted against the measure and several did not vote.
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"It's innovative, it's bringing industry and workers together at the table," said Democratic Sen. Maria Elena Durazo, who carried the bill in the Senate. She called it a "very, very well-balanced method of addressing both the employers, the franchisees, as well as the workers."
Almost every Republican senator spoke in opposition, including Sen. Brian Dahle, who also is the Republican nominee for governor in November.
"This is a steppingstone to unionize all these workers. At the end of the day, it's going to drive up the cost of the products that they serve," Dahle said. He added later: "There are no slaves that work for California businesses, period. You can quit any day you want and you can go get a job someplace else if you don't like your employer."
Restaurant owners and franchisers cited an analysis they commissioned by the UC Riverside Center for Economic Forecast and Development saying that the legislation would increase consumers' costs. Gov. Gavin Newsom's administration also fears the measure would create "a fragmented regulatory and legal environment."
The debate has drawn attention nationwide, including on Capitol Hill where Democratic U.S. Rep. Ro Khanna has expressed hope it will trigger similar efforts elsewhere.
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It's "one of the most significant pieces of employment legislation passed in a generation," said Columbia Law School labor law expert Kate Andrias. She called it "a huge step forward for some of the most vulnerable workers in the country, giving them a collective voice in their working conditions."
The bill grew out of a union movement to boost the minimum wage and Andrias said it would "work in conjunction with traditional union organizing to give more workers a voice in their working conditions."
International Franchise Association President and CEO Matthew Haller countered that the legislation "is a discriminatory measure aimed to target the franchise business model to bolster union ranks."
Organizations representing Asian, Black and LGBTQ businesses sent a letter to senators Monday arguing that the measure would harm minority owners and workers.