California Senate approves fast food labor council with power to set wages

UPDATE: August 30, 2022: The California State Assembly voted to approve with Senate AB 257 last night. Forty-seven members voted in favor of the bill, 19 opposed it and 14 members did not vote. The bill will now go to Governor Gavin newsomwho has until September 30 to sign or veto the bill, the office of the Clerk of the State Assembly confirmed.

The California State Senate passed a heavily modified version of Assembly Bill 257, or the FAST Recovery Act, on Monday with a vote of 21 to 12. Seven members passed. The bill would create a board to regulate the wages and working conditions of fast food workers. The board would also be responsible for regulating working hours and relationships in fast-food chains, which are defined by law as a chain of more than 100 restaurants sharing a common national brand.

Previous versions of the bill applied to chains as small as 30 units and would also have held franchisors responsible for ensuring franchisees complied with health and labor laws. Amendments to the August 25 bill removed these provisions and changed the composition of the council.

The California State Senate’s proposed fast food standards board would consist of 10 representatives: one from the State Industrial Relations Department; two representatives each of fast food franchisees, fast food franchisors, fast food workers and fast food worker advocates; and a representative from the Governor’s Office of Business and Economic Development.

The amended law states that the board would not be authorized to issue new rules until “the Director of Industrial Relations receives a petition approving the establishment of the board signed by at least 10,000 California fast-food workers.”

Amendments to the bill also restrict the life of the proposed council. The council’s existence is only guaranteed until January 1, 2029, in California State Senate legislation.

Due to significant differences in franchisor liability, board composition, and petition process from the original draft, the Senate bill must be re-approved by the California State Assembly. Failing assembly approval, a bicameral conference committee will be responsible for reconciling the two versions before sending the bill to Governor Gavin Newsom.

Newsom did not say at press time whether he intended to sign the bill if it reached him.

A victory for workers and a change in industrial policy

The bill was backed primarily by labor organizations including the Service Employees International Union and Fight for $15, which led a nationwide campaign urging fast-food employers to raise wages. SSome fast-food workers hoped the legislation would improve their workplace experience by giving workers a direct role in shaping policy.

A B 257 will give us a committee where workers like me can finally meet face-to-face with franchise owners and industry leaders and have a say in the rules and standards that affect us most,” Crystal Orozco, a employee of Jack in the Box who was arrested during a demonstration in June in favor of AB 257, said at the time.

Business groups have consistently opposed the bill, arguing that it would impose an effective tax on consumers and force operators to raise menu prices. A study commissioned by the International Association of Franchisees argued that the bill, which would give the council the power to raise fast food minimum wages to $22 an hour, would increase menu prices by up to 20%.

“California already has one of the toughest climates for business, and this bill make it almost impossible for quick service operators who operate on margins,” Greg Flynn, Founder and CEO of the flynn restaurant group, said in a statement released by the IFA. Flynn Restaurant Group operates 2,300 restaurants in 44 states.

By establishing a state board to oversee wages and benefits in an industry, California is being reborn a form of industrial policy once common in the United States: sectoral bargaining.

Sectoral bargaining involves employee, employer and state representatives coming together to set standards and wages. The New Deal and the growth of organized labor in the mid-20th century replaced sectoral bargaining with collective bargaining between individual companies and individual unions, Nelson Lichtenstein said. Lichtenstein is a distinguished professor in the Department of History at the University of California, Santa Barbara, specializing in labor history.

Efforts to resurrect sectoral bargaining, Lichtenstein said, are likely to face significant legal challenges even as they pass through state legislatures.

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