For the first time ever, an unelected council will both set sweeping standards for a specific industry’s wages, hours, and working conditions that prevail over existing laws and have the power to repeal or amend laws and regulations created by the Legislature or a regulatory agency. Earlier versions of the bill would have also established statutory, mandatory joint liability within the franchise industry.
AB 257 (Holden; D-Pasadena) underwent a significant number of amendments on August 25, 2022—ninety-three of them to be exact. While proponents claim the amendments address concerns raised by legislators and opposition, a closer look at the amendments shows the bill is still highly problematic.
Scope of Bill Is Overly Broad
The amendments changed the threshold number of locations a “fast food restaurant” needs to be under the purview of the proposed Fast Food Council from 30 to 100. It did not, however, change much as far as what a “fast food restaurant” is under the bill. The definition is still so broad that it will encapsulate far more than what we think of as traditional fast food establishments and is vague in differentiating between to-go service, counter service, and traditional sit-down restaurants.
The Council’s Broad Power is Unchecked
The amendments largely leave intact the Council’s broad power to create standards that may be enforced as law. The Council has carte-blanche authority to make standards regarding “working conditions,” which could encompass dozens of issues. It can also amend or repeal existing laws, usurping Legislative and agency power. Based on the language in the bill specifically related to minimum wage, it is expected that an increase in minimum wage will be one of the first items pushed within the Council. AB 257 specifically allows any increase to go up to $23.00 per hour in 2023, $6.50 above minimum wage in other industries.
If AB 257 passes, there is sure to be a challenge as to whether AB 257 is an unconstitutional delegation of authority because it leaves the resolution of fundamental policy issues to an unelected body and fails to provide adequate direction for implementing that policy. The Council has unfettered power to enact any standards it wishes and to interfere with standards enacted by the Legislature or regulatory agencies.
The only “check” on this power is if the Legislature affirmatively steps in and enacts legislation preventing the standard, repeal, or amendment from taking place. Any such bill is unlikely to get off the ground given the influence of labor organizations within each house’s labor and employment committee. The bill can easily be stopped by a committee chair refusing to set it for hearing or issuing a “No” recommendation.
There is also a colorable argument that the Council’s power violates Article XIV Section 4 of the California constitution, which vests the Legislature with plenary power over California’s workers’ compensation system. The Council’s broad authority to enact standards related to “health and safety” is so broad it could be read to include workers’ compensation.
Other Problematic Provisions
In addition to the above, the bill contains several troublesome provisions including:
- Unprecedented anti-retaliation language: protected activities would include disclosing information to the media, Legislature, or watchdog or community group or refusing to work if there is reason to believe the restaurant would violate any section of the Labor Code, which could include something as small as a technical violation of a wage statement. This exceeds current laws.
- Enforcement: the language as written leaves open the argument that the Council’s standards can be enforced by private rights of action or the Private Attorneys General Act (PAGA), which will result in costly penalties and legal fees.
- Subsequent Standards Must be More Restrictive: any subsequent standard created by the Council cannot be “less protective”, meaning it must be more restrictive. This does not make sense from a policy perspective and is inconsistent with how the Legislature and agencies conduct rulemaking.
- Joint Liability: while the amendments did remove the joint liability language in Section Two, new language was added to say the Labor Commissioner can hold franchisors liable for violations, seemingly without having to satisfy the existing legal test for joint liability.
Proponents will surely hold last Thursday’s amendments out as making the bill more palatable, but a deeper look at the bill’s remaining provisions shows that is not the case.
Staff Contact: Ashley Hoffman