Regulatory Update: Fast Food Council to Oversee Labor and Safety Standards in California

A new law enacted in California that allows union officials to reshape nonunion fast food restaurant employers’ labor compliance responsibilities could eventually end up having a profound effect on employers in other industries and in the rest of the country, particularly in terms of health and safety.

The Fast Food Accountability and Standards Recovery Act (called the FAST Act), which was designated AB 257 in the state legislature, is scheduled to go into effect on Jan. 1, 2023. The new law creates the Fast Food Council, an organization that is charged with dictating minimum wage standards for employees of fast food restaurants on an industrywide basis.

“Called ‘groundbreaking’ by labor advocates, AB 257 likely will inspire similar labor movements in other industries in California as well as in states and cities across the United States, despite strong opposition and warnings from business owners of increased costs resulting from the bill,” say attorneys Adam Abrahms, Emily Patajo and Sahar Shiralian with the law firm of Epstein Becker Green.

Although the first of its kind in this country, the council idea is a characteristic of labor relations in Europe, where it is not uncommon for labor and management to work closely together to address labor concerns and other issues as they arise. In Germany, for instance, unions typically have seats on the boards of directors of the companies where they represent workers. However, this practice historically has been frowned upon in the United States, where unions generally prefer to have an arms-length relationship with management.

However, the new California FAST Act now gives unions a role in negotiating directly with non-union companies’ management in an industry that labor has traditionally found difficult to organize until their recent success that allowed them to achieve representation in about 200 Starbucks nationwide stores since the beginning of this year.

The law creates a Fast Food Council said to be similar to the European labor organization work councils. The council will be responsible for imposing minimum standards on businesses in the fast food industry in the state regarding wages, hours, training and working conditions, including safety and health standards.

The law defines a fast food restaurant as any establishment that is part of a brand/fast food chain with more than 100 locations nationwide and which primarily provides food and beverages for immediate consumption.

The new council will be composed of 10 individuals and will include one representative from the California Department of Industrial Relations, two representatives of fast food franchisors, two from fast food franchisees, two drawn from the ranks of fast food restaurant employees, two representatives of “advocates for fast food restaurant employees,” and one representative from the Governor’s Office of Business and Economic Development.

Governor Picks Council Members

Under the law, it is the governor’s responsibility to appoint these council representatives, and Governor Gavin Newsom (D) is expected to do so only after consultation with his large labor organization supporters, who have helped shape his government’s pro-labor agenda, point out Abrahms, Patajo and Shiralian.

Unions also do not have to worry about the new council impinging on their turf. The new law specifically states that no standard the council develops and implements can supersede any existing standards that are specified by a valid collective bargaining agreement—so long as the collective bargaining agreement does not waive any occupational health and safety legal protections.

In addition, the law permits cities and counties with populations greater than 200,000 to establish their own local councils who will provide recommendations to the state Fast Food Council. The act specifies that local councils must include at least one representative who is a fast food employee, one who is a fast food franchisor or franchisee, and a majority of representatives from local employment, health and safety agencies.

The state Fast Food Council is required to conduct a full review of all of the applicable minimum standards at least once every three years. Upon that review, the council is required to issue, amend or repeal any standards applicable to fast food restaurants. “Notably, the potential for frequent changes in the standards could create high operational and administrative costs for employers,” explain Matthew Goodman and Margaret Rosenthal, attorneys with the law firm of Baker & Hostetler.

They also point out that the new law prohibits fast food restaurant operators from discharging, discriminating against or retaliating against any employee who engages in specified protected activity relating to fast food restaurant health and safety, including reporting health code violations.

Injecting outside legal counsel into the process, the law grants employees a private right of legal action to enforce this prohibition. If an employer is found to have violated this whistleblower protection provision of the new act, the employee is entitled to reinstatement, treble lost wages and work benefits, and attorneys’ fees if they prevail.

Attorney Scott J. Witlin of the Barnes & Thornburg law firms says the new law appears to have been created by labor organizations although the responsibilities and powers it grants to the new council appear to conflict with the statutory scheme created by Congress in the National Labor Relations Act (NLRA). Other provisions of the new California law also appear to intrude upon the legal regime embodied in national labor law as well, he adds. As a result, a court challenge on that basis “may provide a fertile ground to prevent the new law from burdening the California fast food industry.”

If allowed to stand, the FAST Act definitely puts organized labor firmly in the catbird seat, according to the Epstein Becker Green attorneys. “Under the guise of protecting fast food workers, customers and the public, AB 257 provides labor unions—despite not being elected as the representative of employees under the NLRA—significant influence in setting these minimum standards while simultaneously taking the entrepreneurial control and autonomy away from the owners and operators of these fast food businesses,” they observe.