By:  Kristina Launey and Everett McLean II

Seyfarth Synopsis: The State of California has authorized the creation of the Fast Food Council comprised of representatives from labor and management to set minimum standards for workers in the industry, including for wages, conditions related to health and safety, security in the workplace, the right to take time off from work for protected purposes and protection from discrimination and harassment.

Bill No Longer In The Drive Through

Amidst sweltering 115 degree temperatures and related power outages in Sacramento on Labor Day, Governor Newsom further turned up the heat on fast food restaurants by approving the FAST Act on September 5, 2022 (issuing both a written and video signing message).

Effective January 1, 2023, AB 257, the Fast Food Accountability and Standards Recovery Act (or FAST Recovery Act), will establish a 10-member Fast Food Sector Council, within the Department of Industrial Relations.

FAST And Broad Coverage For AB 257

The new legislation is intended to shake up the fast food industry. The bill (and the eventual Fast Food Sector Council) covers any establishment in California that is part of a fast food chain—defined as a set of 100 or more restaurants nationally sharing a common brand, décor, marketing, packaging, products, and/or services—and that, in its regular operations:

  • Primarily provides food and beverages for immediate consumption on or off premises;
  • To customers to order/select items and pay before eating;
  • With items prepared in advance; and
  • With limited or no table service.

Exempt from the definition of “fast food restaurant” are bakeries that solely produce on premises and sell bread as a stand-alone menu item, and restaurants within grocery establishments, provided the grocer employs the individuals working in the restaurant.

What’s On The Menu For The Council?

The Council has an order to set “sector-wide” minimum standards on wages, working hours, and other working conditions “adequate to ensure and maintain the health, safety, and welfare of, and to supply the necessary cost of proper living” for fast food restaurant workers.

But, the Council will have to hold certain items:

  • It may not promulgate regulations requiring predictable scheduling (excluding reporting time pay), amend current statutes, or create new paid time off benefits (excluding paid rest periods);
  • There is a restriction on the amount the Council may establish for purposes of minimum wage (to no more than $22/hour for 2023 and the lesser of 3.5% and an adjusted Consumer Price Index for Urban Wage Earners and Clerical Workers each year after); and
  • The Council must provide information as requested by the appropriate committees of the Legislature.

The Council Combination

The Council will be comprised of appointed fast food workers and their advocates, franchisees, franchisors, representatives from the Governor’s Office of Business and Economic Development, and representatives from the Department of Industrial Relations. Each member of the Council will serve a term of four years and cannot serve more than two consecutive terms.

The new legislation also provides California counties and cities with populations exceeding 200,000 the discretion to establish Local Fast Food Councils. These local councils would operate independently from the Council and provide written recommendations to the Council regarding minimum state health, safety, and employments standards that they find are reasonably necessary to protect the health, safety, and welfare of fast food restaurant workers.

For Here Or To Go, Discrimination And Retaliation Protections Stay

The bill also prohibits fast food restaurant operators from discharging, discriminating, or retaliating against employees who:

  • Make complaints or disclose information regarding employee or public health or safety;
  • Institute, testify, or participate in proceedings related to public health or safety, including any Council or Local Fast Food Council proceedings or meetings; or
  • Refuse to perform work because they had reasonable cause to believe that the practices or premises of the fast food restaurant would violate worker or public health and safety laws, regulations, or would pose a substantial risk to the health or safety of the employee, other employees, or the public.

A rebuttable presumption of unlawful discrimination or retaliation will be established if an adverse action is taken against an employee within 90 days following the employer learning that the employee filed a complaint, or refused to work based on a reasonable belief that the condition of the restaurant would violate worker health and safety laws. And, the employee has a private right of action under this statute for reinstatement, treble (3x) lost wages and benefits, as well as attorneys’ fees and costs.

Hold The…Obligations For Franchisors

Despite most of the provisions of this bill making it through the legislature, fast food franchisors can at least rest a bit easier knowing that the requirement that franchisors ensure franchisee compliance with a variety of employment, worker, public health and safety laws, regulations, and emergency orders was removed prior to the bill’s passage. This potential threat of joint and several liability was a big cause for concern, but did not make it through to the final version of the bill.

Workplace Solutions

Read this if you’re curious about other pending bills affecting California employers, and stay tuned for our updates on which the Governor approves, and which do not make the cut. In the meantime, please contact the authors or your favorite Seyfarth attorney with any questions.

Edited by Coby Turner