California: Creation of Fast Food Council Has Potential to Create New Regulatory Issues for Employers

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APPLIES TO

Fast Food Employers with CA Employees

EFFECTIVE

January 1, 2023

  

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The Fast Food Accountability and Standards Recovery Act or “FAST Recovery Act” (AB 257) creates the new Fast Food Council, a regulatory body within the Department of Industrial Relations (DIR). The Council will be responsible for addressing many issues in the fast food sector including, but not limited to, wage theft, sexual harassment, discrimination, job security, low pay and benefits, as well as health and safety. Accordingly, the Council will set the statewide minimum standards for wages, working hours, and working conditions for California employees of any large fast-food chain. Any city or county with 200,000 or more residents can also form local fast food councils. The Council will be made up of 10 members from the following sectors: one from the DIR, two representing fast food franchisors, two representing fast food franchisees, two representing fast food employees, two advocates for fast food employees, and one from the Governor’s Office of Business and Economic Development. The Council must still be officially established through a petition process submitted to the DIR. Ten thousand fast food employees must sign the petition which then gives the DIR 45 days to verify the signature requirements. If the petition meets the requirements, the Council will convene within 60 days of the verification. Until the petition process is completed, here is what employers of fast food employees in California need to know. 

 

Applicability. Covered restaurants are a set of restaurants consisting of 100 or more establishments nationally that share a common brand, or that are characterized by standardized options for décor, marketing, packaging, products, and services if the food or beverages are offered: 1) for immediate consumption either on or off the premises; 2) to customers who order select items and pay before eating; 3) with items prepared in advance, including items prepared in bulk and kept hot, or with items prepared or heated quickly; or 4) with limited or no table service (table service does not include orders placed by a customer on an electronic device). There is an exemption for bakeries that sell only bread, rolls, and buns as stand-alone items. Restaurants within grocery stores where the grocery store employs the individuals working in the restaurant are also exempted.  

 

Wages. As of the effective date of January 1, 2023, the Council has the ability to increase the minimum wage for fast food workers up to $22.00 per hour. On January 1, 2024 and on each anniversary date, the rate can increase by the lesser of 3.5% or the increase in the Consumer Price Index.  

 

Health and Safety. The Council can create new health and safety standards, except those that fall under Cal/OSHA’s jurisdiction. In order to change those standards, the Council must first petition Cal/OSHA for adoption, amendment, or repeal of a Cal/OSHA standard. Cal/OSHA then has six months to adopt the Council’s recommendation (three months in the event of an emergency). A change to existing regulations cannot be less protective than existing standards. 

 

Enforcement. The Labor Commissioner has the authority to enforce the Act as well as investigate violations and order any relief or mitigation. The Labor Commissioner can also file a civil action. The Act also creates a private right of action. Any fast food restaurant employee who is discharged, discriminated or retaliated against for exercising their protected right to make a complaint or participate in an investigation has the right to reinstatement, treble damages, and attorneys’ fees.  

 

There are also some areas of confusion in the Act. For example, the Council is free to adopt standards unless the state legislature passes a bill that prevents it from doing so. However, the Council standard becomes legally implemented once it goes through the Office of Administrative Law rulemaking process which does not require approval from the state legislature. It is also important to note that nothing in the Act restricts cities from creating their own minimum wage standards that could conceivably conflict with the state standards. Employers will need to monitor the process of constituting the Council to see if and when additional clarifications may be issued. 

 

Action Items 

  1. Review the bill here. 
  2. Monitor developments as the process to constitute the Council continues. 
  3. Consult with legal counsel to determine how specific provisions may apply. 
  4. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance. 

 

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2022 ManagEase