State fast food bill stirs pushback from local owners

If passed, Assembly Bill 1228 expects fast food corporations to bear legal and other costs when it comes to their fast food restaurant owners at local levels; expected for 2024 ballot

Carl’s Jr Drive-Thru as seen from the corner of Mooney Blvd. and Orchard Ave. (Kenny Goodman)
Carl’s Jr Drive-Thru as seen from the corner of Mooney Blvd. and Orchard Ave. (Kenny Goodman)
Darren Fraser
Published September 9, 2023  • 
12:00 pm

DATELINE – When California Assemblymember Chris Holder (D-District 41) introduced Assembly Bill 1228 earlier this year, his presumed intent was to ensure fast food corporations stand shoulder-to-shoulder fast food restaurant owners who are sued – or faced with other civil or legal issues – and share whatever fines or legal repercussions that may arise from a lawsuit or other action.

However, opponents of AB 1228 say that, if passed, the bill will destroy the owner’s – franchisee’s – autonomy. They say if AB 1228 becomes law, franchisors – fast food corporations – will have the final say in all things related to running the franchise, including hiring, firing and day-to-day store operations.

Holder introduced the bill Feb. 16, but it has had a tumultuous history, bouncing in and out of committee. It failed to come out of committee this past July; as a result, it will be tabled for the remainder of the legislative year. 

A Feb. 17 Sacramento Bee story noted that advocates of AB 1228 are saying this bill is necessary because the current franchise model does nothing to protect owners from financial and legal liabilities. They also contend the current system exposes workers to wage theft, discrimination and harassment.

“Just like they (fast food corporations) set menu prices, it’s time they ensure we have living wages and safe work environments,” Maria Hernandez, a Jack in the Box employee, said in the Bee story.

The Times reached out to Holden for comment on the bill but his office did not comment as of press time.

STOP AB 1228 Coalition

The Stop AB 1228 Coalition includes chambers of commerce from all over California. It includes the California Hawaii NAACP (National Association for the Advancement of Colored People), National Action Network chapters from six counties, multiple restaurant owner and operator associations, industry and community associations – including the California Restaurant Association and the International Franchise Association – and 45 fast food brands, including McDonald’s, Burger King, Del Taco, Subway and Wendy’s.

Wendy’s front entrance as seen from Hurley Ave and Plaza Dr. (Kenny Goodman)

According to the “No on AB 1228” website, which is seeking to stop the bill from passing to “stop the attack on local restaurants,” if the bill is passed it would cause local restaurants to shut down; ultimately eliminating jobs and leading to higher food prices, as well as to frivolous lawsuits filed against restaurants.

On the site, Percy Johnson – who owns seven McDonald’s franchises in Sacramento County – noted in an article published in the Sacramento Bee that he is in fierce opposition to the bill, as it would force national fast-food corporations to exert more control over locally franchised restaurants like his.

“This misguided bill attempts to make national fast-food corporations legally liable for employment and personnel decisions made at my local restaurants,” Johnson said. “By creating a new avenue to file lawsuits against fast-food corporations, AB 1228 means more lawsuits against local restaurant owners, too.”

AB 257

Holden is a former fast food franchise owner, which explains why he introduced AB 1228 this year and why he introduced AB 257 last year.

On Sept. 5, 2022, Governor Newsom signed AB 257, which enacted the Fast Food Accountability and Standards Recovery Act (FAST Recovery Act). It established the Fast Food Council within the Department of Industrial Relations (DIR) to serve as the governing body on all things related to the fast food industry.

Unlike AB 1228, AB 257 did not contain language relating to corporate franchisors. In the Sept. 5, 2022 press release to celebrate Newsom’s signing, Holden said, “Once AB 257 goes into effect, it will have immediate impact on elevating the voice of the fast food worker, by giving them a say in determining workplace standards. Calling out workplace inequities around wages, safety, or issues of harassment and retaliation.”

According to the California Legislative Counsel’s Digest, the Fast Food Council, which will remain the governing body until Jan. 1, 2029, is responsible for establishing minimum standards on wages, working hours, and working conditions for fast food workers. If the council’s standards, rules or regulations conflict with another agency’s standards, rules or regulations, the council has the final say – except in the case of the Occupational Safety and Health Standards (OSHA) Board.

The bill authorizes a county or city with a population of more than 200,000 to establish a local fast food council with the authority to make recommendations to the council.

Lastly, the bill prohibits a fast food operator from discharging or discriminating or retaliating against a restaurant employee for specified reasons.

After AB 257 was passed, opponents drafted a referendum challenging its legitimacy. The referendum is expected to be on the November 2024 ballot.

Darren Fraser