When it Comes to Fast-Food, There’s a New Sherriff in Town

There is groundbreaking news to report in the fast-food industry, at least in California. This month, Governor Gavin Newsom signed into law a bill (AB 257, the Fast-Food Accountability and Standards (FAST) Recovery Act) that puts the power to set minimum wages and working conditions for fast-food workers into the hands of a new council of employees, employers and union activists.

Formerly the domain of state and federal lawmakers, governance of the fast-food employment landscape will now be tasked to a 10-member government-appointed council that will operate within the California Department of Industrial Relations. This group will set minimum standards on wages, maximum allowable hours of work, working conditions, and training for fast-food restaurant employees.

The new law is a big win for unions. Pursuant to the terms of the bill, the council can authorize an increase of the minimum wage earned by fast-food employees up to $22 an hour in 2023. For 2024, the council can raise the hourly minimum wage by another 3.5% or a figure pegged to the U.S. consumer price index. In addition, the law now provides employees with another direct pathway to sue employers. Specifically, it authorizes fast-food restaurant workers to bring causes of action for discharge, discrimination, or retaliation for exercising rights under the FAST Recovery Act.

While a boon for more than 550,000 fast-food workers operating in approximately 30,000 locations throughout the Golden State, franchise owners may be hit hard by the law giving workers a seat at the table in terms of compensation and workplace health and safety. Importantly, the bill's requirements only apply to fast-food establishments consisting of 100 or more locations nationally—those that (1) share a common brand or 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 for food before eating, with items prepared in advance or with items prepared or heated quickly, and with limited or no table service.

Going forward, fast-food operators outside California may want to pay close attention to this development, as the law may well serve as a model in other jurisdictions throughout the country. Of course, if you have any questions about AB 257 or any other employment-related inquiries, the employment specialists at Michelman & Robinson, LLP are here with answers.

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.