September 6, 2022 update: Governor Gavin Newsom yesterday signed AB 257 into law, creating a 10-member Fast Food Council tasked with setting new standards for wages, hours, and working conditions in California.
California lawmakers this month are considering a fast food bill that would significantly shift the relationship between restaurant workers and the corporate chains whose products they sell.
If Assembly Bill 257 passes, California would be the first state to assign labor liability to fast food corporations and not just their individual franchise owners.
The bill’s provisions would let workers and the state name fast food chains as a responsible party when workers claim minimum wage violations or unpaid overtime at a franchise location.
The bill’s language also would allow a franchisee to sue a restaurant chain if their franchise contracts contain strict terms that leave them no choice but to violate labor law.
It’s part of a larger bill pushed by unions to more strictly regulate fast food businesses. AB 257 also includes a measure to create a state-run, fast food sector council to set wage and labor standards across the industry.
Last week the bill survived the “suspense file” process, where controversial bills often are quietly killed. After clearing the Senate Appropriations Committee, the bill awaits a vote on the floor.
Gov. Gavin Newsom has not stated a position on the bill, but his Department of Finance opposes it, saying it would create “ongoing costs” and worsen delays in the state’s labor enforcement system.
If it becomes law, proponents said it could deter wage theft and other abuses in the low-wage industry.
“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. “What’s happened in California is a real effort to try to figure out the fissured economy.”
California’s Fast Food Bill
The fast food bill is one of the most contentious measures the Legislature is considering during its final weeks in session.
The California Chamber of Commerce and the state restaurant association have lobbied hard against it, arguing the bill would upend the franchise business model and ultimately raise costs for franchise owners and consumers. On Wednesday, a group of franchisees flooded the Capitol to oppose the bill.
The Service Employees International Union and its Fight for $15 campaign led a series of strikes this summer to rally for the bill’s passage, including an overnight rally at the Capitol this week.
Currently most workers who allege wage theft, say, at a McDonald’s, Burger King, or a Jack in the Box can only name the owner of their specific franchise location as responsible for paying them back—even as they work under the banner of a multibillion-dollar fast food corporation.
In other industries, California already has done some of what AB 257 proposes to do for fast food. In some cases, the state has expanded responsibility for employment conditions beyond the subcontractor or supplier level to the larger companies they do business with, even though they don’t directly employ the workers.
For instance, in 2014 the Legislature made businesses that use contract workers liable for wage theft committed by those workers’ agencies. Lawmakers later did the same for contractors in the janitorial, gardening, construction and nursing home industries.
Last year the Legislature passed a measure putting major fashion brands on the hook for wage theft by garment manufacturers in their supply chains.
Wage Theft in Fast Food
Fast food is the latest industry attracting this type of regulation, and it is one of the largest and most visible.
Restaurants such as fast-food joints, take-out businesses and cafes employed more than 700,000 workers across the state, according to June federal data. Proponents of the bill estimate 80 percent of the workers are Black, Latino or Asian and two-thirds are women.
SEIU and Fight for $15 say the industry is rife with labor violations. The union released a survey of 400 workers this year in which 85 percent said they were victims of wage theft.
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