Jot Condie, president of the California Restaurant Association
SANTA MONICA, CALIFORNIA - A restaurant trade group is poised to sue the city of Santa Monica if the City Council moves forward on approving an ordinance requiring businesses located on the Santa Monica Pier or other city-owned properties to sign labor peace agreements.
The California Restaurant Association’s (CRA’s) position on the city’s consideration of the ordinance comes as local businesses struggle to recover from economic downturns caused by the Covid pandemic and the Los Angeles-area wildfires.
Todd A. Lyon, an attorney with San Francisco-based Fisher & Phillips LLP, which is representing the CRA in the dispute, said in a recent letter to city officials that labor peace agreements (LPAs) are at odds with the National Labor Relations Act (NLRA), regulate an area of employee-employer relations that Congress intended to be left to free markets and may infringe on employers’ First Amendment rights.
“... I want to bring to your attention that labor peace agreements … adopted by city and state agencies are preempted by federal labor law and unconstitutional,” Lyon’s Aug. 27 letter to the City Council states. “... If the City Council adopts the authorized LPA, I have been engaged to challenge the ordinance.”
LPAs are illegal no matter how they are worded and represent an overreach of government authority, he said.
Such agreements are contracts between a business owner and a union. Under their provisions, the employer agrees to be impartial during labor-organizing efforts and not to interfere with the union’s effort to win bargaining rights with workers.
LPAs, which require employers to behave in a prescribed way, favor unionization before workers can even exercise their right under Section 7 of the NLRA to refrain from joining a labor organization, according to Lyon’s letter..
Jot Condie, the CRA’s president and CEO, said in a statement emailed to the Southern California Record that the proposed ordinance would make the future for businesses in the city less stable.
“Restaurants are facing unprecedented cost increases, from labor to food to compliance, all while still recovering from the pandemic,” Condie said. “Layering on new mandates like this will put many local restaurants in an impossible position. Santa Monica should be looking for ways to keep small businesses alive, not accelerating closures.”
The debate over LPAs in Santa Monica comes amid reports that businesses in the city which operate on city-owned property continue to deal with financial losses. A recent study from the Hatamiya Group indicated that profit margins of such firms plummeted as much as 109% in 2020 as a result of the COVID-19 pandemic, according to media reports.
In addition, a 2024 study by Claremont McKenna College’s Rose Institute of State and Local Government reported that within a four-county region of Southern California, including Los Angeles and neighboring counties, Santa Monica topped the survey’s ranking as the most expensive city to do business in.
The study was based on seven categories that increase the operational costs for businesses: business license fees, utility taxes, sales taxes, minimum-wage ordinances, average commercial rents, crime rates and the cost of housing.
A report last year from the Economic Policy Institute found that as a result of California’s recently enacted minimum wage law for fast-food restaurant employees, privately owned fast-food restaurants have shed 6,166 jobs statewide. In comparison, fast-food jobs nationwide have increased by 1.6% from fall of 2023 to the summer of 2024, the study concluded.