SACRAMENTO—More than 500,000 of California’s fast-food workers could soon be eligible to negotiate their working conditions and wages after a first-of-its-kind union-backed bill passed a major hurdle this week.
Assembly Bill 257, or the FAST Food Recovery Act, passed in the state assembly in a 41–19 vote on Jan. 31 despite heavy opposition from several business advocacy groups and Assembly Republicans.
Some Democrats and unions are praising the bill, while several Republicans and business advocacy groups strongly oppose it.
Authored primarily by Assemblymember Chris Holden (D-Pasadena) and sponsored by the Service Employees International Union, the bill will create an 11-member Fast Food Sector Council—appointed by the governor, the speaker of the Assembly, and the Senate Rules Committee—to regulate the independent and franchised fast-food chains that have more than 30 locations nationally.
Under AB 257, franchisors will have to ensure their chains adhere to employment, public health, and safety laws that would be collectively liable for penalties if violations are committed in their businesses. This means individual chains would be permitted to file lawsuits against their franchisors should they feel any of the new laws be breached.
The biggest food chains in California that will be impacted by the new bill will be McDonald’s, Starbucks, Subway, Burger King, Taco Bell, Wendy’s, Dunkin’ Donuts, Chick-fil-A, Domino’s, and Pizza Hut.
“Despite the fast-food industry’s rapid growth in California’s private sector, employees’ wages continue to reflect some of the lowest in the state,” Holden said on the Assembly floor. “Additionally, fast-food workers often experience wage theft, harassment, and unsafe workplace conditions that have been intensified by the pandemic.”
Several opponents of the bill, including business advocacy groups and the International Franchise Association, warn that AB 257 will have dire effects on an industry still recovering from the effects of the COVID-19 pandemic.
“[The bill is] one of the most damaging pieces of legislation to ever impact the franchise business model,” Jeff Hanscom, Vice President of State and Local Government Affairs for the International Franchise Association told The Epoch Times in an emailed statement.
“It will have disastrous impacts to the thousands of franchise restaurants across the state and effectively dismantle the business model,” the statement read. “Franchising provides unparalleled opportunities for entrepreneurs in California, and better wages, hours, benefits for their workers, and this misguided proposal threatens thousands of California entrepreneurs and workers.”
Currently, franchising already has regulations under the Federal Trade Commission’s Franchise Rule, which prohibits deceptive and unfair practices in franchise sales. In addition to a series of employment laws pertaining to public safety, wages, and other protective classifications, California already has the strictest labor laws in the country.
During the floor hearing, Assemblyman Kelly Seyarto (R-Murrieta) opposed the bill and said “franchisors will simply not grant businesses to do franchisees in California.”
“And you will see some of the most popular franchise franchises grow in other areas and wonder why California doesn’t get to have those, so it just drives entire franchises and franchise brands away from California,” he said.
Assemblyman Bill Quirk (D-Hayward) also opposed the bill, saying “there is clearly a problem in the fast-food industry. I just don’t think having a separate set of regulations for the fast food industry is the way to do it.”
He said franchisors should do a better job of enforcing the laws already on the books to prevent sexual harassment and other harsh working conditions.
“I was sent newspaper stories complaining about sexual harassment—that has to be fixed. That is already illegal. We don’t need new regulations,” he said.
Other opponents say fast-food restaurants will be forced to cut back on labor and resort to automation with the additional layer of regulations forcing them to downsize.
“The result is their food prices are going to go up,” conservative think-tank California Policy Center President Will Swaim told The Epoch Times. “So, this will make it more expensive for workers to work, they'll have to pay dues to the union. Ultimately, it will make the costs of labor more expensive in the fast food industry which is already a really marginal enterprise when it comes to the profit margins.
“It may even go to automated food prep, to just cut out labor so that the actual job losses will be substantial.”
President of the West LA Chamber of Commerce Roozbeh Farahanipour told The Epoch Times the bill will add an additional burden on Los Angeles’ economy, which he called the “most unfriendly business city in the nation.”
“The main problem is if these people had to experience running the business, or they had a small business, at least they could understand how difficult it is with the crazy legislation running the business, and how much they’re going to affect the quality of the life of the people and how much they’re going to increase the unemployment in the state of California,” he said.
Meanwhile, unions and proponents rejoiced when the bill passed, as it has taken quite a journey to reach approval. It was originally introduced by former Assemblywoman Lorena Gonzalez (D-San Diego) in January 2021, approved in April 2021, but failed to pass in the full assembly in June 2021.
The labor union group Fight for 15 said in a statement, AB 257 “would give workers a seat at the table to increase corporate accountability across the fast-food industry.”
Now, the bill will move on to the Senate. If approved, it will then be sent to the governor’s desk for a signature.
