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The FAST Act’s new makeup – the Industrial Welfare Commission

July 11, 2023

With the help of California’s fourth branch of government, the Service Employees International Union (SEIU), Gov. Gavin Newsom’s 2023-24 budget has a line item to resurrect the state’s Industrial Welfare Commission (IWC).

The IWC – which was defunded in 2004 – comes with troubling power, and the ability to sidestep public opinion against unpopular, anti-business policies, such as the FAST Recovery Act.

The FAST Act, which was signed into law last Labor Day by Gov. Gavin Newsom, sought to create an union-controlled council of bureaucrats to micromanage wages and other workplace standards at fast food restaurants across California. But voters were overwhelmingly opposed.

The people spoke up and a referendum to halt the law from going into effect gained over one million signatures. Currently, the FAST Recovery Act is on hold until the 2024 election next year. Unfortunately, the voters couldn’t stop unions from finding a way around the referendum.

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. The IWC, made up of five members appointed by the governor, was established to regulate wages, hours, and working conditions in California.

If this sounds familiar, that’s because it is essentially the FAST Act – but potentially worse.

The IWC will have the authority to convene “Wage Boards” – a group of representatives of employers and employees selected by the Commission to review company policies and employee compensation. Wage Boards will make recommendations to the Commission on what they view as “fair pay” for employees.

The SEIU – notorious for targeting the fast food industry – played a major role in advocating for funding the IWC in the new budget.

David Huerta, president of SEIU, applauded the decision, saying “SEIU members thank Governor Newsom and legislators for listening to workers and taking the bold action needed to make progress against a growing tide of inequality and poverty experienced by low-wage workers and people of color.”

The revival of the IWC places franchised restaurant owners in a particularly precarious position. These individuals have invested their resources, time, and energy into building their businesses, only to find themselves targeted by arbitrary regulations, yet again.

The consequences of this decision are far-reaching and threaten the livelihoods of countless individuals.

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The IWC’s statutory scope is not only limited to the fast food industry, but any other sector it identifies in which 10 percent or more of its workers live below the federal poverty line. It’s no wonder why many business groups have come out against the revival of the Commission.

California businesses have a tough enough time operating in a state with unique laws and regulations such as the Private Attorneys General Act (PAGA), which allows employees to sue their employer for any violation of the nearly 1,200 page California Labor Code. These frivolous lawsuits cost small businesses millions of dollars per year and often result in prolonged litigation.

We must protect the rights of franchised restaurant owners and champion a democratic process that upholds the values of transparency, accountability, and respect for the will of the people. Only through such concerted efforts can we ensure a vibrant and thriving business environment that benefits all Californians.

Tom Manzo is the president and founder of the California Business and Industrial Alliance.

Orange County Register

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The FAST Act’s new makeup – the Industrial Welfare Commission

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