fast food rally

Fast food workers from across California rallied at the state Capitol in Sacramento, urging lawmakers to pass AB 257. Aug. 16, 2022, Photo by Rahul Lal, CalMatters

published on August 29, 2022 - 10:04 AM
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The California Senate has until Wednesday to decide on a bill that would give fast-food workers a potential advantage in labor negotiations.

AB 257, also known as the Fast Food Accountability and Standards Recovery Act (FAST Recovery Act), would establish a fast food council within the Department of Industrial Relations (DIR).

The council, composed of 10 members appointed by the governor, the speaker of the Assembly and Senate rules committee, would hold power over establishing minimum wage standards, working hours and other health, safety and welfare rules pertinent to fast-food workers in the Golden State.

Meetings scheduled by the council would be held at least once every six months and would be open to the public. The bill would also require a review of quick service restaurants’ health, safety and employment standards once every three years.

AB 257 would also authorize a county, or a city with a population of 200,000 or greater, to establish a Local Fast Food Council, prescribing its powers and requirements for compensation.

In addition, the bill aims to prohibit employers from discriminating or retaliating against employees for specified reasons.

Owners and franchisees of quick service restaurants fear the bill, if passed, would threaten prospective franchisees in California by driving up operating costs.

Fears of higher prices to consumers are also concerning franchisees. 

“The State of California has rigorous rules and regulations regarding wage and hour, regarding franchising, regarding the relationships between franchisor and franchisee, the relationship between the employer and employee,” said Ali Nekumanesh, president at Eagle Management Business Consulting and executive vice president of Deli Delicious Franchising, Inc. “Therefore, we think this [AB] 257 is shortsighted and the focus on quick service restaurants is very puzzling to the eyes of the beholder.”

An article published in restaurantbusinessonline.com on Aug. 12 further states that despite the magnifying glass being placed on quick service restaurants, only 1.6% of alleged wage violations have involved restaurants.

“Why single out the quick service industry? The bill’s union backers, chiefly the SEIU, accuse the franchisees, without evidence, of being particularly prone to labor law violations,” wrote Matt Haller of the International Franchising Association (IFA). “In reality, data from the California’s Department of Industrial Relations show that the industry commits far fewer labor, wage and hour violations than other industries.”

Proponents believe the bill “could deter wage theft and other abuses in the low-wage industry,” according to an article at CalMatters.org.

“How you hold the companies at the top of the food chain, who are really setting the terms and conditions of employment, responsible for the lower levels — California has been way ahead on that,” said Janice Fine, professor of labor studies and employment relations at Rutgers University, told CalMatters. “What’s happened in California is a real effort to try to figure out the fissured economy.”

Nekumanesh, Haller and others in the industry fear that this bill will deter new businesses from the state, which already possesses some of the strictest labor laws in the country.

“The state of California is often referenced in publications as one of the worst states to do business,” Nekumanesh said, adding that the California Restaurant Association, IFA and other organizations oppose the bill as well.

He says the evidence contained in the bill, “just doesn’t apply to business sense.”

Fears among franchise owners continue all the way down the line to the consumer, anticipating that, if passed, AB 257 would lead to higher prices due to a food tax, furthering the dangerous inflation that is already striking the economy.

However, the state’s DIR notes that the four most common citations of restaurant employers include not paying wages employees are owed, counting tips toward wages, not allowing rest or meal breaks and not giving pay stubs or paying payroll tax.

This list, however, does not specify quick-service restaurants, in which, for example, tips are commonly not received.

Franchisees and franchisors alike, as well as many restaurant organizations, view this bill as an unnecessary overreach by the state government, and fear that, if passed, AB 257 will spur similar bills in other states, driving up the cost of franchise ownership to individuals looking to buy.

Nekumanesh, Haller and others believe that the opportunity to operate a franchise restaurant will be severely hampered with the passing of the bill.

“Far from tycoons, these business owners are the bedrock of their communities,” Haller said.

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