San Jose franchisees applaud delay in controversial law

Fast-food restaurant owners are breathing easy now that a state law meant to address working conditions among workers is on hold.

Efforts to halt AB 257, also known as the FAST Recovery Act, succeeded this month after restaurant and business trade groups submitted more than 712,000 valid voter signatures for a referendum, state officials announced last week. The effort to overturn the law needed more than 623,000 signatures to qualify as a measure on the ballot. It’ll be up to California voters to keep or repeal the law in 2024.

AB 257, signed into law by Gov. Gavin Newsom last September, was designed to increase wages and improve working conditions for fast-food workers. The first-in-the-nation law creates a 10-member council to set standards for wages, hours and conditions in the fast-food industry. The law, which was set to go in effect Jan. 1, allows the council to raise the minimum hourly wage for fast-food workers as high as $22.

“This is good news for businesses,” John Haile, owner and manager of a Burger King in San Jose, told San José Spotlight. “I was very happy to find out. Now voters will get to decide.”

Save Local Restaurants, a coalition that includes major franchise groups, filed a lawsuit last December to halt AB 257’s implementation while the state was verifying signatures for the referendum. A Sacramento County Superior Court judge granted the coalition’s request, effectively pausing AB 257.

Proponents of the law, including fast-food workers and labor advocates, say a fast-food council gives them a voice and uniquely addresses issues like unsafe working environments and below-standard wages. But opponents argue a fast-food council imposes major decisions on franchisees who treat their workers fairly, and say any issues should be addressed by existing labor laws. The law would hurt local minorities and immigrants who turn to restaurants and small businesses to find upward mobility, they said.

Haile, who has run the local fast-food franchise for roughly 20 years, said California already has regulations on minimum wage and work conditions. He thinks AB 257 is government overreach, and said his restaurant provides entry-level jobs to students paying for higher education. Those opportunities will go away if he has to increase wages, he said.

“I have had people who worked with me here and now they’re a doctor,” he said. “But if we have to pay $22 (an hour), I don’t think we would be hiring minors.”

The latest news is not as welcoming for workers. Theresa Rutherford, president of SEIU 1021, said fast-food employees face sexual harassment, wage theft and other safety issues on a regular basis and have fought for changes under AB 257 for a decade. The union represents more than 500,000 workers statewide.

“AB 257 was very important to address these adverse working conditions,” Rutherford told San José Spotlight. “It’s really sad that these corporations would rather spend millions of dollars to defeat a law that was there to just bring basic benefits to workers.”

Derrick Seaver, CEO of the San Jose Chamber of Commerce, said AB 257 could hurt San Jose business owners who are already struggling to afford the soaring costs of food and housing.

“The legislation, while well-intentioned, was going to have some pretty chilling effects,” Seaver told San José Spotlight. “It’s going to be a net negative at a time when the small business community can least afford it.”

While AB 257 is on pause, Rutherford said the movement has helped workers learn more about their rights.

“Workers are determined that their voice will not be shut down,” she said. “The fight is on.”