The fast-food industry just proved how easy it is to hijack California’s referendum process

A fast-food industry group said on Monday that it has collected enough signatures to stop California’s first-in-the-nation wage law from going into effect on January 1. If the petition is certified, voters will instead decide its fate in a 2024 ballot referendum.

The FAST Recovery Act is unlike any other state law in the United States, giving fast-food workers seats on a “fast-food council” where they would play an active role in negotiating their own employment terms and workplace standards, including an ability to raise the minimum wage to $22 an hour. The fast-food industry thought this bill overstepped, and two days after Governor Gavin Newsom signed it into law in September, a coalition of chains and lobbying groups had launched a campaign to overturn it through California’s famously lax referendum process.

December 5 was the deadline for that coalition to submit the necessary signatures—623,212 of them—to put the law on ice until voters weigh in during California’s next election. The group behind the signature-gathering campaign, called Save Local Restaurants, said on Monday that it cleared this threshold easily, filing more than 1 million signatures. That ended a sprint in which millions of dollars were spent petitioning voters to demand California repeal the FAST Recovery Act, which the group has argued will “drastically increase food prices by as much as 20%” and “create a massive new government bureaucracy to regulate locally owned restaurants.”

An increasing number of critics, though, argue that California’s referendum process has been hijacked by corporate interests. Its barrier to entry is very low (to qualify, an initiative only needs 5% of last election’s voters to sign a petition, and pay-per-signature is allowed), and corporations have found ways to exploit that—usually via massive, multimillion-dollar misinformation campaigns. There is a history of petition circulators (who are typically paid per signature), lying about what the petition even is in order to convince voters to sign the form.

Save Local Restaurants bills itself as “a coalition of California small business owners, restaurateurs, franchisees, employees, consumers, and community-based organizations.” However, the FAST Recovery Act only applies to restaurant chains with 100 or more locations nationwide. According to financial disclosure forms shared with Fast Company, Save Local Restaurants has received donations from hundreds of California-based businesses and organizations, but the bulk of contributions are corporate: at least $100,000 from Subway, $250,000 from Domino’s and Panda Express, $500,000 from Yum Brands, $750,000 from In-N-Out and Chipotle, and $1 million from Chick-fil-A. The group is co-chaired by three corporate lobbying groups—the National Restaurant Association, U.S. Chamber of Commerce, and International Franchise Association.

“These corporations have already spent millions of dollars in an attempt to deliberately mislead California voters and stamp out the progress fast-food workers have won,” Mary Kay Henry, president of the Service Employees International Union (SEIU), a backer of the FAST Recovery Act, said during a press call on Monday criticizing the referendum. “Rather than invest these resources into paying living wages and supporting their franchisees, these conglomerates are instead burning money to subvert our laws and attack our democratic process.”

As the next step, the state must certify that the coalition got enough valid signatures from voters. In October, the SEIU complained to California’s secretary of state and attorney general that the industry was breaking state law by “willfully misleading voters” on the street. The state hasn’t responded yet to the complaint, but the union claims that it turned over “video and audio evidence” of petition circulators “clearly lying” to people they spoke with.

One video, seen in the tweet below, shows a circulator explaining that by signing the petition, voters could help raise the hourly wage for fast-food workers. The woman he’s speaking to grows confused once she reads the text at the top of the form (“Referendum Challenging 2022 Law Authorizing Creation of Council to Set Minimum Wage and Working Standards for Fast-Food Workers”), and she asks him, “So if I sign this, it’s to get it to $22 an hour?” The circulator responds yes, but adds “it’s probably going to take about two years.”

“We haven’t taken a position on this referendum,” explained California Clean Money Campaign president Trent Lange—a surprise guest on SEIU’s Monday press call, who explained that the election-reform group normally wouldn’t appear on such a call. “We’re here today because this is yet another example of the abuse of referendums by massive corporations and other wealthy interests to use unlimited funds to overturn the will of the legislature.”

Lange’s group is one of several raising alarms over the influence that they believe corporations and billionaires now wield over state politics simply by proposing an initiative, outsourcing the petition to a signature-gathering firm, and using their deep pockets to, in Lange’s words, “confuse voters into voting their way.”

Before California lawmakers passed the bill and Governor Newsom signed it into law, many of the chains and industry groups that contributed to Save Local Restaurants spent millions more dollars opposing the FAST Recovery Act—meaning the industry already lost the fight once, in Sacramento.

Meanwhile, polls show a split about the FAST Recovery Act’s popularity. One last year by the left-leaning Data for Progress found that 91% of Democrats, 72% of independents, and 58% of Republicans supported it. Later, once the industry actively campaigned against it, the International Franchise Association released a new survey showing that only 32% of Californians supported it. But what’s worth noting is that under this referendum scenario, the fast-food industry benefits regardless of whether it wins or loses with the voters.

Big Tobacco, Big Tech, Big Oil have likewise tried using California’s referendum process to undo unfavorable laws. Two years ago, companies like Uber, Lyft, and DoorDash dropped over $200 million to pass an initiative that overturned a new California law they didn’t like because it declared that gig workers were employees, not contractors. Fast food’s distinct advantage is that those ride-hail and food-delivery apps won only if voters overthrew the law the app-based companies opposed. Fast-food chains effectively win each month of the FAST Recovery Act’s delay, even if California voters ultimately vote for it in another 22 months.