31 Oct The Coming $20 Taco
Margaret A.M. Heine
is the principal counsel at Heine Law Group in Fullerton, California. She is licensed in California and Washington and has authority to practice before the Supreme Court of the United States and the United States Court of International Trade.
The Coming $20 Taco
A number of new laws affecting employees and employers have either just gone into effect or are going into effect in January 2023. Some of these are merely continuations of present policy while some are offering sweeping change. At least one may bring more court challenges as California continues to push the envelope for controlling companies headquartered outside of California but doing business in the state.
The most sweeping and most likely to be is AB 257 which was signed into law by Governor Newsom on September 5, 2022. Just like the discussion last month of changes in California law that affect egg and pork producers with possible nationwide impact, so too will AB 257.
AB 257 is called the FAST Recovery Act or the Fast Food Accountability and Standards Recovery Act. It can be argued that it not only targets large restaurant chains, like McDonald’s, Starbucks, Wendy’s, Papa John’s, Chick-fil-A, Chipotle, Jack-in-the-Box and Taco Bell, but also creates in essence a state run union for non-unionized fast food restaurant workers.
A fast food restaurant would be defined as a restaurant where people order and pay for their food before they eat and basically would not be provided more than limited table service. The law will apply to franchisees, operators and possibly the franchisor. There will be fines and criminal penalties for non-compliance with the decisions rendered by the Council.
The act creates a Fast Food Council which is empowered to make decisions and set statewide standards for wages, working hours, working conditions, training, health and safety of fast food restaurant workers. The law also sets up parameters in which fast food workers cannot be fired or dismissed.
The decisions of the Fast Food Council will only affect those restaurants which do not have unionized workers. The recommended changes of the Council must be submitted in a report to the legislature and cannot take effect before October 15 of the year the recommendation is made.
The law provides that fast food workers will receive a minimum 3.5 percent increase each year, and in no event less than .10 per hour starting in 2024. It also sets that the minimum wage for fast food workers must be at least the state minimum wage and no more than $22/hour in 2023.
Proponents of the law have said that the law will allow fast food workers to make a living wage, have employers more responsive to harassment, food safety issues, break and meal break violations, as well as overtime pay. According to some sources, over 85% of fast food workers in California have been underpaid. It has been estimated that the average worker needs a minimum $20/hour to be able to make a “living wage”.
The Council has to completely review the industry at least once every 3 years. The Fast Food Council is mandated to hold open meetings every six months that are open to the public. Any county or city with a population of more than 200,000 may set up their own Council.
The law requires that at least 10,000 fast food workers, statewide, must approve the creation of the council. There is also a present action to have the law repealed and set for referendum next year. If sufficient signatures are collected for a referendum vote, the law would not go into effect until 2024 so that it could be voted on in November 2023.
With a minimum wage of $22/hour for fast food workers, can the industry survive in California? Will this impact other businesses and wages in the State? It is estimated that there are approximately more than 550,000 fast food workers in the state that would be impacted by this new law.
By comparison, the minimum wage in California beginning January 2023 will be $15.50/hour.
How is this like the egg and bacon/pork producers situation? As pointed out earlier, this new law sets up a quasi-union setting the standards for a complete industry. It tramples onto the same grounds that are typically negotiated between unions and companies: wages, benefits, working conditions. In fact, there is a name for an industry wide work standard, it is called sectoral bargaining.
In the U.S., sectoral bargaining is prohibited by federal law. Does the California law sidestep the federal labor law issues? Isn’t this similar to AB5 which set out to standardize Uber, Lyft, Doordash drivers and other independent contractors’ rights, wages, and hours? Does this spell a death knell for franchises in the State of California?
Franchisees are typically not in control of branding, pricing, supply, royalty fees, and other costs associated with their business, will this wage increase put them out of business? Should the State mandate to this degree how businesses operate in the state?
Also starting in January 2023 is the new California Privacy Protection Agency. This Agency will be able to enforce the privacy laws which prohibit employers from disclosing certain information about their employees. The privacy laws also allow employees to review the data collected on them during the last 12 months. The new Agency can fine companies from $2500/violation to $7500/violation, and thus puts some teeth into the newly enacted California Privacy Rights and Enforcement Act.
AB 2188 prohibits employers from discriminating against employees who use cannabis, even if found in their hair, blood or urine if it is the non-psychoactive cannabis metabolites identified in the drug test.
AB 1041 and AB 1949 expand rights of employees to time off. AB 1041 expands the rights to family leave for up to 12 weeks of time off to care for a family member. It adds to the definition of a family member to anyone who is the “equivalent of a family relationship”. While AB 1949 expands bereavement leave for up to 5 days unpaid leave if taken within 30 days, and it permits that employee to use vacation, personal time or sick time to make it a paid leave. The law does not change any employer policies in place which provide at least the same amount of leave.
California, with the fifth largest economy in the world, is setting a stage for employment law changes and expansion. Will it be a boon for workers? Will it be the demise of business? Will you sign a petition supporting the new requirements or sign to bring the changes to a vote of the electorate? 2023 promises to be an interesting year for the employers and employees alike.