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Governor Gavin Newsom recently signed into law, the Fast Food Accountability and Standards Recovery Act (the Act), a far-reaching law that will impact fast-food employers in California. The new law, which is set to take effect January 1, 2023, establishes a “Fast Food Council” ("Council") whose members will have the authority to establish minimum standards regarding wages, hours, and working conditions for fast-food restaurants whose brands have more than 100 locations nationwide.
Who is in the Council?
The Council members will be appointed by the Governor, the Speaker of the Assembly, and the Senate Rules Committee, and will consist of two representatives of franchise owners, two representatives from the corporate chains, two fast-food workers, two fast-food “advocates” (union representatives), one representative from the Department of Industrial Relations, and one representative from the Governor’s Office of Business and Economic Development.
Members of the Council serve a term of four years.
What is the purpose of the Council?
The Council will be required to establish various minimum standards regarding wages, hours, and working conditions for fast-food restaurants who fall under the Act.
Before the Council has the power to issue new standards, at least 10,000 California fast-food restaurant workers must sign a petition supporting the Council’s creation. Once this petition process is finished, the Council will have broad authority “to establish sector wide minimum standards on wages, working hours, and other working conditions adequate to ensure and maintain the health, safety, and welfare of, and to supply the necessary cost of proper living to, fast food restaurant workers and to ensure and effect interagency coordination and prompt agency responses regarding issues affecting the health, safety, and employment of fast food restaurant workers.”
In addition, the Council must coordinate with the Governor and local and state agencies regarding the health, safety, and employment of fast food restaurant workers.
Which fast food restaurants are subject to the new law?
The Act covers “fast food restaurants” that are part of a “fast food chain” if the restaurant provides food or beverages in the following manner: 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; 4) with limited or no table service (table service does not include orders placed by a customer on an electronic device). A “fast food chain” is defined as a set of restaurants consisting of 100 or more establishments nationally that share a common brand, or that are characterized by standardized options for decor, marketing, packaging, products, and services.
Restaurants located within grocery stores and bakeries are not considered fast-food restaurants and are exempted from the Act.
Does the law increase the minimum wage for fast-food workers?
The Act gives the Council authority to raise the minimum hourly wage for fast-food workers as high as $22 in 2023. The $22 cap rises each year, based on inflation. Specifically, in January 2024, the Council may increase the hourly minimum wage by no more than 3.5% or a figure based on the U.S. consumer price index.
The Act provides that it is unlawful for any fast-food restaurant to employ a worker for lower wages or for longer hours than those fixed by the minimum standards set by the Council.
Who enforces the Council’s rules?
The California Labor Commissioner and the Division of Labor Standards Enforcement are required to enforce the standards established by the Council, and have the power to investigate violations and issue citations against employers.
However, the Occupational Safety and Health Standards Board is not required to enforce standards established by the Council, but the Council may petition the Board for changes in safety and health standards. Local health departments are not required to enforce standards issued by the Council.
Furthermore, in addition to the Council, any county or city with a population of at least 200,000 people may establish a local fast-food council, which may provide written recommendations to the Council regarding minimum state health, safety, and employment standards.
Are there any discrimination or retaliation rules related to the Act?
Yes. The Act creates a private right of action. Under the Act, fast-food restaurant employers are prohibited from discharging or in any manner discriminating or retaliating against employees for any of the following reasons:
- The employee made a complaint or disclosed information or the fast food restaurant operator believes the employee disclosed, or may disclose, information to the franchisor, to a person with authority over the employee or another employee who has the authority at the fast food restaurant to investigate, discover, or correct the violation or noncompliance, to the media, to the Legislature, or to a watchdog or community based organization, or a governmental agency regarding employee or public health or safety.
- The employee instituted or participated in a proceeding relating to employee or public health or safety, or any Council or Local Fast Food Council proceeding.
- The employee refused to perform work in a fast food restaurant because the employee had reasonable cause to believe that the practices or premises of that fast food restaurant would violate worker or public health and safety laws.
The Act creates a rebuttable presumption of unlawful discrimination or retaliation if a fast-food restaurant employer takes any adverse action against one of its employees within 90 days following the date when the fast food restaurant employer learned of the employee’s actions.
The Act creates a private right of action. Any employee who was discharged or retaliated against in violation of the Act may file a lawsuit seeking reinstatement, lost wages, and reasonably incurred attorney’s fees and costs.
How does the new law affect collective bargaining agreements?
According to the Act, the standards set by the Council “shall not” supersede a collective bargaining agreement (CBA) so long as the CBA provides for wages, hours of work, and working conditions that are equivalent or give greater protection than the standards set by the Council, and a regular hourly rate of pay not less than 30% more than the state minimum wage. If those conditions are met, the CBA is not trumped by the Act.
Is there anything else fast food employers need to know?
The Act is unprecedented, complex, and expected to muddle employment law compliance for fast-food restaurants. Employers seeking more information should consult their counsel.
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