California aims to transform how fast food workers are treated

Dion Lee/Vox; Getty Images

The restaurant industry lost its fight against a big labor bill recently signed by Gov. Gavin Newsom.

Ten years after the launch of the Fight for $15, fast-food workers nationwide are still grappling with low and stolen wages, unsafe workplaces, and rampant sexual harassment. California lawmakers recently passed a bill to address those problems, aimed at improving conditions for the more than 550,000 fast-food workers in the state.

The bill, known as AB 257 or the FAST Recovery Act, passed the California Assembly in January, was narrowly approved by the state Senate in August, and signed this month by Gov. Gavin Newsom. “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,” the governor said. “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.”

The legislation would establish a new state council with the power to set minimum working standards for fast food restaurants across California, including wages up to $22 per hour. The bill was pared down with more than 90 amendments in late August, and lawmakers cut a section that would have made it easier to hold companies like McDonald’s and Pizza Hut legally responsible for any labor violations at individual stores. Right now, big corporations are generally not liable for their franchisees breaking labor laws, and bill drafters hoped they would finally be able to change that.

In many European countries, unions negotiate working standards that apply to workers across an entire industry, not just one company. This approach, known as “sectoral bargaining,” is particularly useful for protecting workers toiling in industries that rely heavily on part-time staff, contractors, and subcontractors. Sectoral bargaining is prohibited by federal labor law in the US, but the bill in California is a similar idea, and a step that a labor-friendly state can take on its own.

Food industry and franchise trade groups certainly recognize the threat the FAST Recovery Act presents to their business model, and the national implications if it becomes law.

“If passed, also expect to see similar legislation in states like New York, Oregon, Washington, Illinois, and more,” warned lobbying materials from the National Restaurant Association. “The greatest chance for defeating this legislation is in the California Senate, making it imperative for the industry to focus its efforts there.”

“The FAST Act was designed to hurt the franchise business model in California, and that is what it will do,” said International Franchise Association President Matthew Haller. “IFA will not stop fighting to ensure other states won’t suffer from the harm that California has started.”

Unions and labor allies, in turn, advocated hard for the bill — organizing worker strikes, petitions, and lobby trips to Sacramento and Washington, DC. “This landmark bill will be the most important piece of labor law to pass in decades,” SEIU President Mary Kay Henry declared after California’s Senate passed the bill.

In June, presidents from America’s largest national unions sent a letter to Democratic Gov. Gavin Newsom urging him to “support and champion” the FAST Recovery Act. Newsom, who is rumored to have 2024 presidential ambitions, vetoed a big labor bill last year that would have made it easier for California farmworkers to unionize.

Kate Andrias, a labor law professor at Columbia University who has written about sectoral bargaining, told Vox that she sees the FAST Recovery Act as “a significant step forward.” “There are ways in which workers can influence wages and regulations already, but what this bill does is create a focal point for workers to be a more empowered part of the administrative system,” she said.

How the FAST Recovery Act would work

The law would establish a 10-member council that includes political appointees from state health and labor agencies, as well as food industry officials, fast food workers, and union representatives. The council would “promulgate minimum standards” for things like wages and working conditions for restaurants where workers aren’t unionized and the bill would establish protections for workers who exercise their rights. While AB 257 was originally set to clarify joint liability between the franchisor and franchisee, that language was struck at the last minute. The legislation, however, does give the Labor Commissioner authority to hold franchisors liable for violations, a provision business groups remain worried about.

The standards set by the new council would apply to any chain in California that has at least 100 stores nationwide that share a common brand. (Drafters had originally pushed for a minimum of 30 stores, but Senate lawmakers agreed to raise that threshold.)

The California legislature would have an opportunity to reject or change the council’s proposed standards, as would the state’s Occupational Health and Safety Administration.

Advocates say the bill will help prevent wage theft, sexual harassment, and general lack of compliance with existing labor standards

Angelica Hernandez, an activist with the Fight for $15 campaign in California, has worked at McDonald’s for the last 18 years. In that time, she told Vox, she had her wages stolen in the form of unpaid hours for time worked and experienced sexual harassment on the job. When she tried to tell her manager about her harassment, she said she was laughed at and dismissed.

A McDonald’s spokesperson said the company “has been clear that sexual harassment will not be tolerated” and pointed to McDonald’s Global Brand Standards for safe, respectful, and inclusive working environments, which took effect for all restaurants beginning in January 2022.

In response to Hernandez’s allegations specifically, McDonald’s says it investigated her harassment concerns, and “matters [were] closed in alliance with our company policies.” With regard to the wage theft, the spokesperson noted that over the last few years the restaurant Hernandez works at “has implemented safeguards that further ensure employees are properly paid for their work.” The spokesperson said they also “conduct routine wage and hour audits” at this particular restaurant.

“With AB 257, we would have a more dignified job,” Hernandez said. “We would finally have a voice and have a place where we can make sure that we are setting better standards. It’s sad because we work in a free country but we’re not free in our job to speak out.”

Mindy Schauer/MediaNewsGroup/Orange County Register via Getty Images

Fast food workers rally and demand the passage of AB 257, landmark legislation they said would protect and empower the state’s fast food workforce, in Irvine, California, on July 27.

The vast majority of fast food workers in California are women and people of color, and many report similar experiences as Hernandez. In one survey of California fast food workers, released in May by the Fight for $15, 85 percent said they experienced wage theft on the job. Another recent survey, commissioned by the Los Angeles County Department of Public Health and conducted by the UCLA Labor Center, found 43 percent of workers experienced workplace injury or illness, nearly half experienced verbal abuse, and a quarter said they were retaliated against by their managers for reporting workplace issues.

In August, in a joint study between University of California San Francisco and Harvard’s Shift Project, researchers found California fast food workers are paid nearly $3 per hour less — almost $6,000 less annually — than workers in comparable service-sector jobs across the state, and are more likely to have unpredictable schedules and work part-time involuntarily.

While California already has some of the most robust labor laws on the books, advocates say those rules are often flouted in part because franchisees have little legal authority to make changes to their businesses aside from cutting corners on worker pay. (The bill was introduced by Assembly member Chris Holden, a former Subway franchise owner in Pasadena.)

“Franchises can’t control pricing, hours of operation, or their suppliers,” said Brian Callaci, the chief economist at the Open Markets Institute, an anti-monopoly think tank. “All they can do is drive down labor costs, so the franchising model is really designed to put the interest of local employers and their workers at odds.”

Matthew Haller, president of the International Franchise Association, told Vox that franchise brands ensure their franchisees comply with the law “by virtue of their franchise agreements, and have an incentive to ensure compliance to protect the brand.”

The restaurant industry warns the bill would hurt businesses and consumers

One of the main arguments put forth by opponents of the FAST Recovery Act is that the bill would make it harder and more costly for stores to operate and that lawmakers would be better off dedicating more resources to California’s labor department to enforce existing rules.

Sean Redmond, the vice president of labor policy at the US Chamber of Commerce, called AB 257 “a radical proposal to micromanage the fast food industry” and said consumers would bear the consequences through higher prices. Other business leaders are warning of reductions in jobs and working hours.

The business-backed Campaign to Stop AB 257 blasted the idea as “unelected political appointees to run California’s entire counter service restaurant industry from Sacramento.”

Still, supporters of the bill pushed back on this framing. “Exploiting your workers is not a socially permissive competitive strategy,” Callaci said. “I think it’s that blunt.”

It wasn’t initially clear how Senate lawmakers would proceed. California’s Department of Finance had come out against the legislation, saying it “could lead to a fragmented regulatory and legal environment for employers and raise long-term costs across industries.”

A step toward sectoral bargaining

Labor advocates believe the FAST Recovery Act would represent a meaningful step toward sectoral bargaining, as right now states are barred from passing their own collective bargaining law for private-sector workers. To do so would be what’s known as an illegal preemption of the National Labor Relations Act, which governs unions for private employees.

The big labor reform bill known as the Protecting the Right to Organize Act (PRO) that unions are advocating for in Congress would not legalize sectoral bargaining, but it includes measures that would also move things closer to that point. Andrias, of Columbia University, said the PRO Act would clarify the standard for joint-employment between franchisors and franchisees, and require the GAO to study sectoral bargaining. The bill would also make it generally easier for workers to unionize and strike.

National labor advocates say while the FAST Recovery Act would be an innovative solution, it also does not represent a radical departure from past models. “It is based in well-settled principles of law,” wrote Berkeley law professors Catherine Fisk and Amy Reavis. “It is akin to existing appointed bodies, such as the California Energy Commission and California Coastal Commission, that are designed to tackle difficult issues and ensure input from stakeholders.”

And there are similar experiments happening elsewhere across the country. In 2015, then-New York Gov. Andrew Cuomo convened a wage board to evaluate compensation in the state’s fast food industry. This led to an increase in the minimum wage for New York fast food workers, phased in over six years. In 2018, Seattle established a labor standards board to make recommendations for domestic workers, and Detroit followed suit with a multi-industry board in 2021.

Thinking about labor organizing across broad industries, advocates say, is a helpful shift in perspective, and it can also take different forms from these aforementioned models. In 2018, for example, public school educators mobilized through the new #RedforEd movement, and right now there’s a wave of national grassroots organizing with Starbucks and Amazon workers.

“Sometimes the term ‘sectoral bargaining’ can be a distraction,” said Andrias. “What we’re really talking about is broader-base bargaining, and that could look different in different contexts.”

Update, September 6, 11:05 am: This story was originally published on August 15 and has been updated with details about the final bill and its passage.