Conservatives sound alarm over California bill that creates unelected regulatory council for fast food industry

A new California bill that would pass off regulation of the fast food industry to a unelected council has raised concerns with Republicans and business groups struggling to recover from pandemic lockdowns.

The bill's proposed “Fast Food Sector Council” would host 11 members appointed by the California governor, which would include fast-food workers, franchisors, and franchisees.  

Introduced in 2021, AB-257, the Fast Food Accountability and Standards (FAST) Recovery Act, was touted as increasing the rights and working conditions of California’s over 500,000 fast-food workers. It passed the state assembly in Jan. 2022 and the state Senate Labor, Public Employment and Retirement Committee held a hearing on the bill Monday.

If signed into law, the FAST Recovery Act would create a new Fast Food Sector Council within the California Department of Industrial Relations and introduce new regulations, including one that would make the franchisor jointly liable for certain violations by its franchisee.

The bill’s proponents say would reduce “wage theft” and shore up protections for the largest and fastest growing group of low-income workers in the state.

"I think it creates an opportunity for there to be a seat at the table for all of the parties who really need to have a chance to voice their concerns to the franchisor and to see that their working conditions and the issues that impact them are taken seriously," said Assembly member Chris Holden (D-Pasadena), one of the bill’s four sponsors and a former Subway franchisee.

But Jeff Hanscom, Vice President of State and Local Government Affairs for the International Franchise Association, called the bill “one of the most damaging pieces of legislation to ever impact the franchise business model.”

"AB-257 is It will have disastrous impacts to the thousands of franchise restaurants across the state and effectively dismantle the business model," Hanscom said, according to ABC 10.

Jesse Lara, an El Pollo Loco franchisee that testified against the bill on Monday, said the bill would also impact “coffee shops, bakeries, yogurt and ice cream counters, juiceries, delis, pizzerias and tens of thousands of independently owned and operated restaurants throughout the state.”

Supporters said that the bill would protect working class minorities, estimating that about 80% of California fast food workers are Latino, Black or of Asian descent and two-thirds are women.

But the International Franchise Association said a growing number of women and racial minorities own franchise establishments, reports the Associated Press. They added that “continuing an economic recovery from the pandemic” would be threatened by the bill.

Some California companies, like In-N-Out, believe that removing power from the legislature was dangerous.

“There would be no limit to their authority to set new rules or to overturn the values that have created a high-quality workplace for over seven decades. Taking away our ability to interact with our associates will ultimately damage our long-established relationship of trust and, in turn, diminish the experience of customers,” said Arnie Wensinge, the Chief Legal and Business Officer for In-N-Out Burger.

Conservative critics have warned that the council could reduce opportunities for inexperience and unskilled job applicants that were hurt most by the COVID-19 pandemic by raising wages and standards too high.

Richard Berman noted in a Washington Times op-ed that employment at that state’s full-service restaurants had already plateaued as the minimum wage rose.

“Four spots on the council are reserved for workers and “employee advocates,” which opens the door for unions to infiltrate the standards-setting process,” Berman said.

“If passed, these unions would likely leverage the rule-making body to make it more challenging for businesses to make staffing decisions based on merit.”