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Newsom Signs FAST Recovery Act Into Law in California
The law is designed to increase protections for fast food workers by creating a council to set minimum wage and workplace standards. Still, many argue it could negatively impact the franchise industry at large.
This Monday, California Gov. Gavin Newsom (D) signed Assembly Bill 257, or the FAST Recovery Act, into law. 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. The council will include fast-food employees, worker advocates, franchisees and government representatives.
“California is committed to ensuring that the men and women who have helped build our world-class economy are able to share in the state’s prosperity,” Governor Newsom said in a press release. “Today’s action gives hard-working fast-food workers a stronger voice and seat at the table to set fair wages and critical health and safety standards across the industry. I’m proud to sign this legislation on Labor Day when we pay tribute to the workers who keep our state running as we build a stronger, more inclusive economy for all Californians.”
Newsom’s decision comes despite significant opposition from franchisees, franchisors and small business owners, who argue that this law will result in a rise in menu and labor prices, exacerbated by the highest U.S. inflation rate in decades.
The International Franchise Association (IFA) said in a press release that the law “stands to increase prices as much as 20% at impacted restaurants and harm local businesses, without improving existing worker protections in the state.”
The IFA notes that less than one-third of Californians support the bill and points to a survey by the Employment Policies Institute, which found that 83% oppose AB 257 due to “deep concerns about the negative impacts of this bill on fast-food industry growth, jobs and price inflation.”
“By signing this bill, Gov. Newsom is siding with special interests rather than the people and small businesses of California,” said IFA President and CEO Matthew Haller. “This bill has been built on a lie, and now small business owners, their employees, and their customers will have to pay the price. This bill is a fork in the eye to franchise owners and customers at a time when it hurts most. IFA continues to hear over and over how local franchises do not know how they will be able to make it once this bill goes into effect. Underrepresented communities will be hit hardest.”
Ironically, the bill’s author, Assemblymember Chris Holden (D), was actually a long-time Subway franchise owner in the early ’90s. In a statement last week, Holden asked those in the franchising industry to reconsider their position. “Speaking as a former franchise owner, I would have welcomed this inclusive process, that in reality benefits not only the worker but franchisee as well,” he said.
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