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Fast Recovery Act Passes in California Senate with Major Amendments

Under the proposed law, franchisors in California with over 100 units would be subject to labor standards formulated by a committee of fast-food restaurant employees, franchisees and corporate brands, as well as government workplace regulators.

On Monday, the California State Senate passed a heavily amended version of Assembly Bill 257, or the FAST Recovery Act, with a 21 to 12 vote. The bill aims to provide California fast-food workers and unions more influence over wage rates and workplace standards by including them in a committee that would have the authority to draft state labor rules for fast-food restaurants. 

According to this version of the bill, which was amended on Aug. 25, the official makeup of that 10-person committee will be as follows: 

  • One representative from the state’s Department of Industrial Relations
  • Two representatives of fast food franchisees
  • Two representatives of fast food franchisors
  • Two representatives of fast food workers 
  • Two representatives of fast food worker advocates
  • One representative of the Governor’s Office of Business and Economic Development. 

This group would draft state labor standards for fast-food brands, which are defined by the legislation 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. 

The amended law also offers new safeguards, with the council prohibited from issuing new rules until after the director of industrial relations receives a petition approving the creation of the council “signed by at least 10,000 California fast-food restaurant employees,” for example. Amendments to the bill also limit the lifespan of the proposed council. 

Notably for franchisors, the amended bill would no longer hold franchisors responsible for ensuring franchisees complied with health and labor laws. Previous drafts of the AB-257 bill would have resulted in franchisors being considered joint employers, meaning they would share accountability for an individual franchisees’ violation of labor standards. Many franchisors expressed their concern that this could destroy the traditional franchise model.

Since the FAST Recovery Act was first introduced, it has been primarily backed by labor organizations and fast food workers who say it would protect them from employer abuse, including wage theft and sexual harassment. Many small business owners argue that the bill could raise menu prices if it becomes law. Several members of both groups gathered in Sacramento last week to argue their sides.

Due to the significant amendments, the Senate bill must be reapproved by the California State Assembly or else a bicameral conference committee would need to reconcile the two versions before sending the bill to the desk of Gov. Gavin Newsom.

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