Will California supersize the bargaining power of fast food workers?

A ground-breaking state law could raise work standards for fast food employees while keeping them safe.

By Bobbi Murray, Capital & Main

This story is produced by the award-winning journalism nonprofit Capital & Main and co-published here with permission.

Fast food workers have been heralded by government officials, executives and some doctors as essential workers during the pandemic. But evidently not treated as such — they endure skirmishes with unmasked customers and work long hours because of scant staffing with other employees out sick, some becoming infected with COVID themselves.

A California measure to improve work standards in the state’s fast food sector was defeated by three votes in the Assembly in July. But it jumped back to life on Jan. 20, reintroduced with modifications by Assemblymember Chris Holden (D-San Gabriel Valley), who chairs the Assembly Appropriations Committee.

The clock is now ticking — the measure has to pass the Assembly by Jan. 31 before it moves on to the Senate. An Assembly vote is expected this week.

The Fast Food Accountability and Standards Recovery Act (FAST Recovery Act) was introduced in January 2021 by then-Assemblymember Lorena Gonzalez, but Gonzalez resigned a few weeks ago to take over as leader of the California Labor Federation. AB 257 would establish a Fast Food Sector Council that includes representation from the Department of Public Health; corporate fast food franchisors (companies like McDonald’s and Jack in the Box); franchisees (individual owners of local franchise outlets); and fast food workers, who would be represented on the council by two of their own.

Unions deem it important at a time when fast food workers in L.A. County, for example, who are disproportionately nonwhite women, make on average less than $26,000 a year. Such employees are twice as likely to drop below the federal poverty line. For the more than 557,000 workers employed by over 30,000 franchise locations in the state, the legislation raises the possibility of better compliance with current laws and standards.

The council would create standards for all parties, says Holden, and the Legislature would not craft the regulatory language but review for approval the measures that council participants agree upon. The bill states that the council would establish “sectorwide minimum standards on wages, working hours, and other working conditions,” including those related to health and safety. Holden was approached by the Service Employees International Union to reintroduce AB 257 — the union is carrying on a national Fight for $15 campaign that has raised wage standards in 56 cities, according to the website. (Disclosure: The SEIU is a financial supporter of this website.)

“It was important to be specific about including the workers that we really saw falling between the cracks, paid at or below minimum wage, sometimes operating in situations that are not conducive to good working environments,” Holden says.

“We thought that because these are workers who many times are women, you have safety issues along those lines, and how are those being addressed?”

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Lizzet Aguilar, an employee at a McDonald’s in Los Angeles, says she is all for AB 257. She has worked for the franchise in the area for 12 years — as a cook, a maintenance person, a server. In November 2020, she says, the number of workers showing up for work suddenly dropped — management explained it was people going on vacation, traveling to Mexico to visit family, all kinds of reasons to be absent. “It was COVID and they didn’t tell us anything.”

People were ill, and others were afraid to come to work, she says.

Suddenly one employee was doing the work of two. The restaurant was small and everyone worked closely. In November 2020 Aguilar came down with COVID, as did her husband and the rest of her family. “We had to quarantine but they didn’t pay us.”

When she returned to work, she got all kinds of attitude from people ordering their McMeals. “We get badly treated by some customers,” she says. In addition, there was no more air conditioning — a cost-cutting measure — and workers sweltered. (One more task the bill assigns to the Fast Food Sector Council would be crafting more protection for frontline service workers who are being harassed by customers during the pandemic.)

“That’s why we have to fight for AB 257, (for) someone to listen to us about worker protections,” Aguilar says.

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While we may think of the local McDonald’s or Jack in the Box as a mom-and-pop business, opening a restaurant can require $500,000 in liquid capital and as much as $2 million-plus in investment.

The local McDonald’s or Jack in the Box is often a small business that pays for the brand, and many franchisees may end up feeling more beholden to their corporate bosses (who control their bottom line) than they do to workplace regulations and minimum wage standards. AB 257 is intended to put more responsibility for health, wage and labor violations on the shoulders of corporate franchisors: It would allow franchisees to sue franchisors when the bottom line impedes their ability to follow regulations or pay a minimum wage. Instead of looking at fast food restaurants as individual businesses that set their own terms, the language of the bill defines a fast-food chain as a group of restaurants of 30 or more under the same brand. More responsibility is directed to the top.

Franchisors and the franchisees are essentially a joint employer, says Nelson Lichtenstein, labor historian and author of The Retail Revolution: How Wal-Mart Created a Brave New World of Business.

Uniform pay and work standards set by a council would relieve the squeeze on franchisees by taking out an element of competition, he says — the terms are agreed upon and all operate according to the same framework.

A state council could protect workers rights more effectively than trying to unionize the fast-food sector, Lichtenstein believes. There have been some robust fast-food worker unionization efforts, but scant success. Collective bargaining has become more challenging in general, but particularly in this sector.

“How many McDonald’s have been unionized? Zero. Starbucks? — two,” Lichtenstein says.

The opposition to AB 257 includes two of the biggest lobbies in the state, the California Restaurant Association (CRA) and the California Chamber of Commerce. In a statement to Capital & Main, Jot Condie, President and CEO of the CRA, said: “This bill is substantially the same proposed legislation as AB 257 (2021, Gonzalez) which failed last year amid arguments that the legislation was unfair and unworkable. The California Restaurant Association’s concerns with this legislation remain the same as they were last year — the legislation sets aside existing labor laws in favor of a new set of rules that will be developed and enforced by 11 unelected political appointees who are not accountable to voters.”

*   *   *

When New York state reevaluated its minimum wage in 2015, it convened a wage board to hike the minimum to $15 for fast food workers. In Seattle a labor standards board has been created for domestic workers — it monitors employer compliance and makes recommendations to the city council for review, debate and approval. In this way, according to Ken Jacobs, chair of the University of California, Berkeley, Center for Labor Research and Education, California’s new law would be a supersized version of already established practice.

“This proposal would have a board that would have workers, government, business, and others [represented], who will then look at conditions in the industry and set standards to address those specific conditions.

“The basic concept is there. This would be the first modern labor standards board on a state level covering an industry of this size — this would be the first of its kind,” says Jacobs.

Holden, who reintroduced AB 257, knows the math of being a franchisee. He opened up a Subway store at a bustling intersection in Pasadena in 1992 and owned it for two years.

“You have to come up with a bunch of money and then the franchisor says, ‘It’s OK, you can borrow my name,’” he says. It takes an investment in multiple outlets to make a franchise business work.

The franchisor establishes standards the franchisee must meet to stay in business. Under the council structure that would be set up by AB 257, franchisors, franchisees and employees would have a means to agree on work standards.

It’s to the benefit of the fast food industry, Holden says. “The franchisor, the franchisee and employee are the three pillars of what makes the brand.”

The employee is the face of the business, he says. The council would give employees a chance to sit at the table with franchisors and franchisees.

It could set a template in the fast-food industry, Lichtenstein says. “California is a pioneer on social issues,” he adds. States took the lead on policy during the Progressive Era, ushering in women’s suffrage and setting wage and hour standards.

“With the stalemate in Washington,” Lichtenstein says, “it’s up to the states.”

Copyright 2022 Capital & Main

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