Fast Food Unions, Restaurants and Newsom Strike Last Minute Deal – Employment Law Weekly

Fast Food Unions, Restaurants and Newsom Strike Last Minute Deal

Late Thursday night the California Legislature finished its 2023 session, but not before frantic lobbying by advocacy groups, some controversy and last-minute deal-making. The most tumultuous legislative deal made earlier this month is aimed at the fast food industry in California.

The backstory begins with the passage of the Fast Food Standards and Accountability Recovery Act in 2022 – Assembly Bill 257 – giving the state’s 550,000 fast food workers a seat at the table and bargaining power.

This 2022 law would have established the Fast Food Council within the Department of Industrial Relations until January 1, 2029. It would have been composed of 10 members who would to establish sectorwide minimum standards on wages, working hours, and other working conditions related to the health, safety, and welfare of, and supplying the necessary cost of proper living to, fast food restaurant workers.

The law was opposed by franchise owners, fast food companies and the California Restaurant Association. Joe Erlinger, the President of McDonald’s posted an open letter which opposed the law, and he claimed “Economists say it could drive up the cost of eating at a quick service restaurant in California by 20% at a time when Americans already face soaring costs in supermarkets and at gas pumps.”

In response to this Act, California small business owners, restaurateurs, franchisees, employees, consumers, and community-based organizations announced the formation of a coalition to refer the FAST Act back to voters and suspend its implementation until they have a say in November 2024. The coalition’s effort is co-chaired jointly by the National Restaurant Association, the U.S. Chamber of Commerce and the International Franchise Association.

On December 5, 2022, the Save Local Restaurants coalition announced it submitted to county elections officials over one million signatures from Californians in order to prevent AB 257 from taking effect until voters have their say on the November 2024 ballot.

Next, Katrina S. Hagen Director, California Department of Industrial Relations, sent the coalition a letter on December 27, 2022 stating that it intended to implement AB 257 – the FAST Act – on January 1, 2023.

The Local Restaurants coalition therefore filed a lawsuit on December 29, 2022, claiming that the state’s Constitution dictates that, as part of the referendum process, laws cannot go into effect until voters have an opportunity to exercise their voice and vote on the proposed legislation. A request for a preliminary injunction was granted in that case in January 2023 by Sacramento County Superior Court Judge Shelleyanne W.L. Chang. The Department of Industrial Relations was prohibited from implementing AB 257 until it was either disqualified from the Ballot by the Secretary of State, or the Voters had their say at the scheduled election.

Moving into 2023, the Secretary of State determined that the the referendum petition filed against AB 257 contains more than the minimum number of required signatures. In response to the referendum, the SEIU backed another bill, AB 1228 which was introduced on February 16, 2023. The bill would impose joint-employer liability on franchised businesses – including the very restaurant chains that loudly decried AB 257

AB 1228 bill would have required that a fast food restaurant franchisor share with its fast food restaurant franchisee all civil legal responsibility and civil liability for the franchisee’s violations of prescribed laws and orders or their implementing rules or regulations. The bill would authorize enforcement of those provisions against a franchisor, including administratively or by civil action, to the same extent that they may be enforced against the franchisee. The bill would provide that a waiver of the bill’s provisions, or any agreement by a franchisee to indemnify its franchisor for liability, is contrary to public policy and is void and unenforceable.

In September 2023, deal was made between fast food companies, unions and lawmakers, detailed in an amendment to AB 1228. The agreement would give a $20 minimum wage to fast food workers starting next April. And fast food companies would not face potential liability for labor violations at their franchises, if the ballot referendum to undo the controversial Fast Food Standards and Accountability Recovery Act is withdrawn, saving both sides the time and money on the campaign.

The amendment also prohibits any city, county, or city and county from enacting or enforcing any ordinance or regulation applicable to fast food restaurant employees that sets the amount of wages or salaries for fast food restaurant employees, .

According to a summary by CalMatters, lawmakers sent the following bills which are of interest to California employers and the insurance industry, to Governor Gavin Newsom for his signature, or possible veto.

– – Health care employees: An agreement to eventually raise the minimum wage to $25 an hour for tens of thousands of health care workers. In exchange, under SB 525, hospitals and other medical employers get a 10-year moratorium on local measures to increase compensation. Workers at larger hospitals and dialysis clinics would be the first to see the increase, starting in 2026, followed by community clinics and other health facilities. Employees at smaller and rural hospitals will have to wait until 2033 to see the $25 bump.

– – Striking workers: A bill that is one of the California Labor Federation’s top priorities, to allow striking workers to collect unemployment benefits after two weeks on the picket line, is especially notable this summer, when labor disputes involving California screenwriters, hotel workers, restaurant employees and others are leaving  many without pay as they strike for better working conditions. But business groups oppose Senate Bill 799, arguing that the state’s unemployment program is already over strained.

Not every bill made it, however. For instance, AB 518, by Assemblymember Buffy Wicks, would have extended who can take paid family leave to “chosen family” who don’t have a legal or biological relationship. The measure was held in the Senate.

Fast Food Unions, Restaurants and Newsom Strike Last Minute Deal

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