California Lawmakers Pass Bill to Improve Conditions for Fast-Food Workers

State lawmakers approved a first-of-its-kind bill that supporters say could improve working conditions for roughly half a million fast-food employees in California and spur nationwide ramifications. Gov. Gavin Newsom has until Sept. 30, 2022, to sign or veto the legislation, amid stiff industry opposition.

AB 257 promises to give some of the lowest-paid workers a bigger voice to shape workplace policies tackling pay and safety violations that labor experts say are rampant in the industry, led by some of the country's most recognizable corporations.

Dozens of people at the state Capitol erupted in cheers and chants of “Si, se pudo!” (“Yes, it could be done” in Spanish) on Monday afternoon, as a narrow majority of 21 state senators pushed past outspoken opposition from Republican colleagues. Industry lobbyists fought hard against the legislation, arguing it will hurt small franchise owners, kill jobs and raise prices for California consumers.

Angelica Hernandez, a longtime fast-food worker who slept outside the state Capitol earlier this month to push for the Fast Food Accountability and Standards (FAST) Recovery Act, also celebrated its advance.

“It’s so important this bill was passed because we’ll stop suffering from wage theft and being victims of sexual harassment. That’s why I fought day after day for this bill,” said Hernandez, adding that she has worked at a McDonald’s restaurant in Los Angeles for 18 years. She spoke at a press conference organized by the Service Employees International Union, which co-sponsored the FAST Act.

AB 257 aims to create a Fast Food Council made up of worker, employer and government agency representatives to set minimum standards that would apply to large chains with 100 or more establishments nationwide. The 10-member council would have the authority to boost minimum wages for cooks and cashiers to $22 an hour next year. Subsequent minimum wage increases would be tied to the consumer price index.

At least 10,000 fast-food restaurant employees would need to sign a petition calling for the council's creation before it's set up.

The bill, by Assemblymember Chris Holden (D-Pasadena), initially made fast-food corporations liable for wage theft and other law violations found at their franchise restaurants, which are owned by small-business owners who pay fees to represent the brands. But Holden nixed that section from the final bill in a compromise with critics. Another amendment limits the council’s life span to six years.

Still, the legislation represents “one of the most important pro-worker bills in decades,” following the example of fast-food workers enjoying higher wages and benefits in countries like Denmark, said David Madland, a senior fellow at the left-leaning Center for American Progress in Washington, D.C.

“It's such a big deal … not only for the workers in California, but many workers all around the country who are similarly situated and have so much to gain by seeing this succeed,” said Madland, who also spoke at the press conference.

“It has the potential to transform the fast-food industry, a quintessential low-wage industry, into [one that delivers] jobs with good wages and decent work and dignity,” he said. “But it also shows a path forward for other low-wage industries.”

Opponents, such as the International Franchise Association, called AB 257 a “reckless bill” that would unfairly target the industry, increase fast-food prices for consumers and risk putting small-franchise owners out of business. Those concerns were echoed by diverse business groups, including the California Black Chamber of Commerce and the CalAsian Chamber of Commerce.

“Franchising has opened the door for hundreds of thousands of entrepreneurs to pursue their dreams and millions of workers to establish a career, but this bill stands to break all that down while raising prices for Californians and forcing restaurants to close their doors,” said IFA’s President and CEO Matthew Haller in a statement. “Gov. Newsom should stand up for local businesses, the people of California, and responsible government, and veto this legislation.”

Higher costs would translate into higher food prices and less employment in the industry, according to a UC Riverside School of Business Center for Economic Forecasting and Development analysis earlier this month. The center’s director, Christopher Thornberg, who authored the study, told KQED it was commissioned by the IFA and released before the announcement of final amendments to the bill, such as a cap on minimum wage increases.

The association also disputed that working conditions are worse in fast food establishments compared to other businesses. Limited-service restaurants represent a much lower proportion of wage-theft complaints per 1,000 employees filed with the state than other industries, such as transportation and warehousing, according to a study by the Employment Policies Institute, a research group with ties to the restaurant industry.

Cases of wage theft are often underreported. Vulnerable workers, such as undocumented immigrants, are less likely to complain because they fear retaliation, ignore their rights, or distrust state agencies, according to advocates and researchers.

A recent survey of fast-food workers by the SEIU, a main supporter of AB 257, found eight in 10 said they experienced at least one form of wage theft, while prior surveys also have found a high rate of pay violations.

Most of the estimated 550,000 fast-food employees in California earn close to minimum wage at franchise fast-food restaurants, and are adults of color, including many immigrants.