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On Labor Day, California’s Governor, Gavin Newsom, signed Assembly Bill 257, the Fast Food Accountability and Standards Recovery Act (“the Act” or “FAST Recovery Act”) into law. The FAST Recovery Act aims to protect and give California nonunionized fast-food workers bargaining power for better wages and better working conditions. The FAST Recovery Act creates a 10-member Fast-Food Council (“Council”), that will be tasked with setting California’s minimum standards for wages, hours, working conditions, and training for fast-food employees.
Under the Act, the regulated fast-food establishments are defined as those consisting of 100 or more locations nationally that: (1) share a common brand or that are characterized by standardized options for decor, marketing, packaging, products, and services; and (2) provide food or beverage for immediate consumption on or off premises to customers who order and pay before eating, with items prepared in advance or with items prepared or heated quickly, and with limited or no table service. Accordingly, bakeries and eateries within grocery stores are excluded. Also excluded are employees whose employment is covered by a valid collective bargaining agreement, so long as that agreement offers equal or greater protections than the Council’s standards and expressly provides for wages, hours, working conditions, and an hourly rate of pay no less than 30% more than the state minimum wage.
The Council will be comprised of two representatives of fast-food employees, two representatives of advocates for fast-food restaurant employees, two representatives of fast-food franchisors, two representatives of fast-food franchisees, one representative from the California Governor’s Office of Business and Economic Development, and one representative of the California Department of Industrial Relations (“DIR”). These positions will largely be appointed by the Governor and one representative of fast-food employees will each be appointed by the Speaker of the Assembly and Senate Rules Committee. Notably, before the Council can establish any standards or rules, a petition signed by at least 10,000 fast-food workers approving the Council’s creation must first be submitted to the DIR. Once the petition is approved, the first Council meeting will be held within 90 days, followed by an additional meeting every six months thereafter until January 1, 2029.
Potential Minimum Wage Increases
The Act provides for additional significant benefits for the fast-food employee. For example, the law caps the 2023 fast food minimum wage that can be set by the Council at $22.00 an hour, while the state minimum wage is $15.00 for businesses with 26 or more employees. In addition, after Jan. 1, 2024, the sector’s minimum wage will be adjusted for inflation, capped by the lesser of 3.5% or the rate of change of the US Consumer Price Index for Urban Wage Earners and Clerical Workers. The Act also permits the establishment of Local Fast-Food Councils in any county or city with a population of more than 200,000, and same must include at least one representative of a fast-food restaurant franchisor or franchisee and at least one representative who is a fast-food restaurant employee. Although these local councils will operate independently, they can make written recommendations to the state Council.
Protection from Employment Discrimination
The Act also provides fast-food employees with protections against discrimination and retaliation in the workplace. Specifically, under the Act, fast-food restaurants cannot discharge, discriminate against, or retaliate against any employee who engages in certain protected activity relating to fast-food restaurant health and safety. Further, the Act provides a private right of action to any employee discharged, discriminated against, or retaliated against in violation thereof, and entitles any prevailing employee to reinstatement, treble damages for lost wages and work benefits, and attorney’s fees.
Opposition and Pending Referendum
No sooner than the Act was signed into law, opponents filed a referendum with the California Attorney General seeking to overturn and block the Act from going into effect on January 1st, until the matter can be put before voters in November 2024. While this Act is heavily supported by labor organizations, including the Service Employees International Union (SEIU), not surprisingly, it has met with much opposition from small business owners, restaurant owners, and business leaders, among others. Fast-food restaurant owners and operators feel the fast-food industry is being targeted, and they fear the unfortunate outcome will simply be an increase in consumer costs and costs to businesses struggling to survive. Along with the “Stop AB 257” Campaign, several fast-food chains opposed and lobbied against the bill before its passing.