California’s Fast Food Bill May Link Chains to Wage Theft and Other Offenses

In this month, California legislators are discussing a fast food measure that would drastically alter the relationship between the workers in the restaurant industry and the large corporations whose products they sell.

In the event that Assembly Bill 257 is passed into law, California would become the first state to extend workers’ compensation insurance coverage to fast food chains rather than just their individual franchise owners.

If the bill passes into law as written, employees and the state could hold fast food franchises liable for any minimum wage violations or unpaid overtime that occur in franchised locations.

Because of the bill’s wording, franchisees can sue restaurant chains if their contracts force them to violate labor laws.

It’s a provision of a wider law that unions are pushing to impose stricter regulations on fast food restaurants. In addition, AB 257 includes a proposal to establish a state-run fast food sector council with the authority to establish industry-wide wage and labor standards.

READ MORE:

The bill was successfully removed from the “suspense file,” where contentious legislation is typically discreetly terminated, last week. The bill has passed the Appropriations Committee in the Senate and is now awaiting a vote on the floor.

Despite the fact that Governor Gavin Newsom has not taken a stance on the measure, his Department of Finance is opposed to it on the grounds that it will increase “ongoing costs” and lengthen delays in the state’s labor enforcement system.

Supporters of the bill argued that if passed, it would help curb wage theft and other forms of worker mistreatment in the low-wage sector of the economy.

Professor of labor studies and employment relations at Rutgers University, Janice Fine, has said that California has been “way ahead on that.” “How you hold the companies at the top of the food chain, who are really setting the terms and conditions of employment, responsible for the lower levels,” Fine explained. To understand the state’s splintered economy, “what’s happening in California is a real endeavor.”

California’s fast food bill

The fast food law is a hotly debated issue in the state legislature as the current term winds down.

The California Restaurant Association and the California Chamber of Commerce have fought aggressively against the bill, claiming it would disrupt the franchise industry and lead to higher prices for consumers and company owners. Franchisees flocked to the Capitol on Wednesday to voice their opposition to the law.

The Service Employees International Union organized a number of strikes and rallies this summer, including an overnight rally at the Capitol this week, to push for the adoption of the law.

READ MORE:

Currently, even though they work under the banner of a multibillion-dollar fast food giant, most employees who allege wage theft can only designate the owner of their own franchise store as liable for paying them back.
Some of the things that AB 257 would require of the fast food industry are currently requirements in other sectors. The state may require larger companies that do business with smaller ones to uphold the same employment standards as the former, even if the former do not directly employ the workers.

In 2014, for instance, the law was changed to hold companies responsible for pay fraud committed by temp firms. Subsequently, legislators extended the same protections to janitorial, gardening, construction, and nursing facility independent contractors.

Late in 2017, the legislature enacted a law making high-end clothing retailers financially responsible for wage theft committed by their suppliers.

The fast food industry’s rampant wage theft

One of the largest and most publicized industries, fast food is the newest target of this form of regulation.

More than 700,000 people were working in restaurants like fast food chains, takeout places, and cafes in the state as of June, according to data collected by the federal government. Proponents of the law believe that 60% of the workforce is female and 40% is non-white.

Labor rights groups like as SEIU and Fight for $15 have claimed that the industry is plagued by infractions. Eighty-five percent of workers polled in a survey conducted by the union this year reported being victims of wage theft.

Organizations representing businesses have voiced concerns that the law unfairly singles out fast food. A survey released this month by the Employment Policies Institute, a national think tank with ties to the restaurant industry, shows that the proportion of wage claims made against this sector of business in California is smaller than its share of the workforce.

Influence of money and consumption

It is too soon to determine if shared liability has made it simpler for the state to recover unpaid wages, according to specialists in the field of labor relations. Months are lost as the state investigates pay theft. Moreover, when the state issues citations to businesses in an effort to collect unpaid wages and penalties, the employers typically file an appeal, putting in motion administrative hearing processes that can drag on for years.

Four years after it was filed, the case against Cheesecake Factory has yet to be heard. According to Aaron, advocates are hoping for a resolution this year. Workers who were interviewed were represented by the Maintenance Cooperation Trust Fund, whose former head, Lilia Garcia-Brower, is now the California State Labor Commissioner.

In 2020, representatives from the labor commissioner’s office blamed the increasing complexity of liability rules for the significant backlog in handling the hundreds of individual wage claims filed annually by workers.

Still, legislative staffers projected shared liability would “almost certainly” boost labor compliance in fast food by pushing the larger corporations to scrutinize the behavior of franchisees.

Aaron said that has been visible in the janitorial business since the 2015 legislative change. The worker center hosts meetings with customer companies who use cleaning services to inform them of their legal obligations under the law.

In regards to wage theft claims, “we find, often, clients desire to avoid the liabilities that contractors would bring,” Aaron stated. It’s true what they say about money’s influence: