Vice President, Labor Policy, U.S. Chamber of Commerce
September 01, 2022
Back in June, this blog opined that a radical proposal in the California legislature known as the Fast Food Accountability and Standards Recovery Act (FAST Recovery Act or AB 257), would make it much harder and more expensive for restaurant owners to operate. At the time, the California Assembly had already approved the measure, and the Senate was taking it up for consideration.
Despite opposition from the business community –including the U.S. Chamber – that body passed AB 257 on August 29, albeit with some amendments, which the Assembly immediately accepted. The bill will next go to Governor Gavin Newsom – and we urge the Governor to veto this destructive legislation.
In essence, AB 257 is a proposal to micro-manage the fast-food industry with unelected bureaucrats. The bill would install 10 individuals on a “Fast Food Council” with the power to dictate various terms of employment like wages and benefits for all fast-food restaurants whose brands have more than 100 locations nationwide, regardless of whether those terms make any business sense.
A saving grace, if one can call it that, of one of the Senate amendments is that it increased the number of nationwide locations triggering coverage from 30 to 100, but that is cold comfort for the individual franchisees whose small businesses still would be upended.
In addition, according to the University of California Riverside Center for Economic Forecast and Development, Californian consumers can expect to pay 20% more at local restaurants should this harmful legislation be enacted. Even the California Finance Department opposed the bill, saying it would create a “fragmented regulatory and legal environment for employers and raise long-term costs.”
As an aside, the revised bill also removed the word “Sector” from the erstwhile Fast Food Sector Council, which perhaps belies what is really behind all of this. Observers of labor policy are well aware that the phenomenon of sectoral bargaining is a key feature of labor relations in places like Europe, where terms of employment are negotiated and applied to an entire sector of the economy, but that is not generally how American labor law operates.
In contrast, the National Labor Relations Act (NLRA) contemplates organizing employees at individual businesses with labor unions negotiating for them, which involves more work and, frankly, convincing workers that they should support the union wishing to represent them.
In an industry like fast food, one challenge is that individual restaurants owned and operated by franchisees are legally separate corporations, so AB 257 aims to reduce the necessity of organizing by circumventing the process with diktats from bureaucrats. For what it’s worth, another Senate change removed joint and several liability on franchisors for alleged violations by their franchisees, but the broader goal remains: labor unions and their political allies want to impose a form of sectoral bargaining that runs afoul of American labor policy. Hopefully Governor Newsom will not go along with this radical proposal.