It’s Not Just the Food That’s Fast – Expect Rapid Changes to The Fast-Food Industry

It’s Not Just the Food That’s Fast – Expect Rapid Changes to The Fast-Food Industry

Introduction

On Labor Day 2022, Governor Gavin Newsom signed a one-of-a-kind law, which created a Fast-Food Council to establish new standards for the fast food industry regarding working conditions, hours, and wage [i]  The bill, authored by Assemblymember Chris Holden (D – District 41), was created in responses to the fast-food workplace concerns brought to light during the COVID-19 pandemic.[ii]  AB 257 will go into effect on January 1, 2023.[iii] The Fast-Food Council will exist until at least January 1, 2029.[iv]

 

Issues with Fast Food Industry

Cited in the California Bill Analysis was a review by the Los Angeles Times of 1,600 OSHA complaints in the fast-food industry during the pandemic, which found OSHA inspectors were slow to intervene.  Specifically, “[i]n response to those 1,600 COVID complaints over the course of the pandemic, inspectors have visited only 56 fast-food outlets, according to OSHA records.”[v]  Furthermore, other workplace concerns such as workplace violence, sexual assault and wage theft were cited as prevalent issues in the fast-food industry.[vi]  A nationwide survey of women fast food workers by Hart Research Associates found “40% of women in the fast-food industry have experienced unwanted sexual behaviors on the job, including 28% who have experienced multiple forms of harassment.”[vii]

Wage theft is also a prevalent issue in the fast-food industry; a Los Angeles Times survey found “89% (of respondents) said they have been forced to do off-the-books work, been denied breaks, been refused overtime pay or been placed in similarly unsavory circumstances.”[viii]  Furthermore, the “majority of workers included in the survey said they had experienced three or more forms of wage theft.  Eight in ten said they considered their working conditions to be just fair or poor.”[ix]

 

Who is Affected by AB 257?

The “fast-food chains” to be affected by the creation of the Fast-Food Council are any fast-food restaurants consisting of 100 or more establishments nationally which share a common brand, or that are characterized by standardized options for decor, marketing, packaging, products, and services.  According to the Bureau of Labor Statistics, approximately 385,000 people work as Fast-Food and Counter Workers.[x] According to the Service Employees International Union of California (co-sponsor to AB 257), California has approximately 556,000 fast-food workers.[xi]  Despite the conflicting numbers of fast-food workers, it is clear several hundred thousand fast-food workers will be impacted by this law.  The Fast-Food Council is established within the Department of Industrial Relations and will be composed of ten members to be appointed by the Governor, the Speaker of the Assembly, and the Senate Rules Committee.[xii] These offices will also prescribe the powers of the Fast-Food Council.

 

What will the Fast-Food Council Do?

The Fast-Food Council will be tasked with outlining minimum fast-food restaurant employment standards, including wages, working conditions and training.  The Council will also have the power to issue, amend, and repeal any other rules and regulations as necessary to enact employment standards for fast-food employees.  The creation of the Fast-Food Council will be subject to a petition signed by 10,000 fast-food restaurant employees approving the creation.  Once the standards have been enacted, the Labor Commissioner and the Commissioner’s deputies will be in charge of enforcing the standards.

AB 257 requires the Council to submit a report to the California Legislature, as specified, for a standard, repeal, or amendment of a standard to be effective.  No standards, repeals, or amendments shall take effect before October 15 of the same year.

Every three years, the Council will complete a full review of the adequacy of minimum fast-food restaurant health, safety, and employment standards.  Following that review, the Council will be required to issue, amend, repeal, or make any other recommendations related to the fast-food employment, health and safety standards applicable to fast food restaurants.

The Council will be required to hold meetings or hearings no less than every six months.  These hearings would be open to the public and would authorize the Council to coordinate with and authorize local agencies to hold such meetings.  Counties and cities with a population greater than 200,000 are authorized to establish a Local Fast-Food Council, which are permitted to provide recommendations to the State-Wide Council.

Finally, AB 257 prohibits a fast-food restaurant operator from discharging or in any manner discriminating or retaliating against any fast-food restaurant employee for making any complaints, instituting any proceedings, or refusing to perform work that violates worker safety or public health.[xiii]  AB 257 creates a cause of action and right to reinstatement for employees in this connection, as well as a presumption of unlawful discrimination and retaliation if any adverse action is taken within 90 days of the employee making any complaints, instituting any proceedings, or refusing to perform work.[xiv]

 

Proponent Comments

The Service Employees International Union of California, co-sponsor of this bill argues:

AB 257 is critical for California’s 556,000 fast-food workers, 70% of whom are people of color. Fast food workers represent the largest and fastest growing group of low-wage workers in the state, yet they lack sector-specific protections.[xv]

AB 257 is a step toward empowering the state’s fast-food workers and holding billion-dollar companies accountable for workplace violations. After more than seven years of California’s fast-food workers speaking out about employment violations, no large fast-food corporations have taken responsibility for such issues. COVID-19 has only exacerbated these workplace injustices. This bill will improve working conditions for hundreds of thousands of fast-food workers in the state.[xvi]

 

Opposition Comments

The International Franchise Association in opposition stated, “[r]ecent statistics show growing numbers of women and minorities owning franchise establishments, underscoring the importance of preserving the small business franchise model to promote minority and female entrepreneurship as well as continuing an economic recovery from the pandemic.”[xvii]

This potential for continued growth is threatened by a common misconception of the franchise business model. This misconception is that the owner of the franchise brands – the “franchisors” – actually own and operate the stores and make employment decisions for them. Franchise establishments across the state are locally owned small businesses operating under a national brand. The local business owners are in charge of all employment decisions, including hiring, firing, wages and benefits. AB 257 makes the improper assumption that the franchisor and franchisee have some collective control over each other’s day-to-day business affairs.[xviii]

 

Takeaway

Although the new standards for fast-food restaurants will not be immediately known, it is clear the Fast-Food Council will identify the new standards related to wages, working conditions and training, which will affect how the states fast-food restaurants will conduct business.  Fast-food restaurants should keep up with the Fast-Food Council and prepare to implement the new standards enacted by the Council.  As always, consult with a reputable employment attorney to ensure compliance with AB 257.

 

 

 

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Sources


 

[i] AB 257, Legislative Counsel’s Digest (09/06/2022); https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB257

[ii] Id.; see also Mkhlian, Stephanie. “Assembly Passes Fast Food Recovery Act.” Assembly Passes FAST Food Recovery Act | Official Website – Assemblymember Chris Holden Representing the 41st California Assembly District, 31 Jan. 2022, https://a41.asmdc.org/press-releases/20220131-assembly-passes-fast-food-recovery-act.

[iii] Micheli , Chris. “Governor Newsom Signed AB 257 – What Is the Fast Food Council?” California Globe, 6 Sept. 2022, https://californiaglobe.com/articles/governor-newsom-signed-ab-257-what-is-the-fast-food-council/#:~:text=AB%20257%20enacted%20the%20Fast,10%20members%20with%20specified%20powers.

[iv] Labor Code § 1471(m)

[v] Williams, Lance. Diaper masks, close quarters: Fast-food restaurants have struggled to protect workers from COVID-19. Los Angeles Times. January 2021.

[vi] Id.

[vii] Heart Research Associates. Two in Five Women in Fast Food Industry Face Sexual Harassment on the Job. October 2016.

[viii] Hsu, Tiffany. Nearly 90% of fast-food workers allege wage theft, survey finds. Los Angeles Times. April 2014.

[ix] Id.

[x] https://www.bls.gov/oes/current/oes353023.htm

[xi] CA B. An., A.B. 257 Assem., 1/27/2022

[xii] Labor Code §§ 1471(a)(1), (b)

[xiii] Labor Code § 1472

[xiv] Id.

[xv] https://www.bls.gov/oes/current/oes353023.htm

[xvi] Id.

[xvii] Id.

[xviii] Id.