Silicon Valley businesses caught in fast-food law limbo

A landmark state fast-food law to improve worker conditions and wages is stuck in the courts.

AB 257, which implements new standards for fast-food workers in California, is temporarily halted as of Friday. The law was supposed to take effect at the start of the year. Also known as the FAST Recovery Act, the law sets up a 10-member council made up of employees, employers and government officials to make decisions on wages and other working conditions.

Save Local Restaurants, a coalition that includes major franchise groups, submitted more than one million signatures from California voters last month to repeal the law with a referendum on the 2024 ballot. The state planned to implement the law as signatures were being verified, but the coalition filed a lawsuit last week arguing AB 257’s implementation should be halted regardless of how long signature verification takes. A Sacramento County Superior Court judge paused the law pending a hearing on Jan. 13.

“Above all, today’s decision by the Sacramento Superior Court protects the voices of over one million California voters,” Save Local Restaurants said in a news release. “While this pause is temporary, the impact is beyond just one piece of legislation and keeps intact for the time being California’s century-old referendum process.”

Brian Hom, a Vitality Bowls franchise owner in San Jose, said the pause in AB 257 means his business has time to breathe. He’s concerned about how implementing the law will affect his business costs.

“It would have been: let’s see how I can make a profit, or do I increase my prices? Do I cut my staff to see if I can stay in business?” Hom told San José Spotlight. He employs 12 workers at each of his two locations. “It’s great that they did a temporary halt on it, and I’m hoping that the people will get to vote on this.”

Opponents argue a fast-food council will impose major decisions on franchisees who treat their workers fairly, and say any issues should be addressed by existing labor laws. Proponents say a council gives workers a voice and uniquely addresses issues like unsafe working environments and below-standard wages. In San Jose, these problems culminated in protests at a local Burger King in 2021.

Olivia Garcia, a Domino’s Pizza employee in San Jose, said workers feel frustrated after putting in years of effort to get AB 257 passed. Garcia said she still experiences PTSD from facing harassment on the job.

“An angry customer tried to break into our workplace and yelled threats to hurt my coworkers and myself. He spewed xenophobic hate messages,” Garcia told San José Spotlight. “We will not go back to the shadows, we will not be silent or idle while working in an industry in crisis.”

Ruth Silver Taube, a worker’s rights attorney and San José Spotlight columnist, said the temporary pause leaves fast-food workers in limbo. If a referendum is placed on the November 2024 ballot, she said workers will have to stick with the status quo for the next two years.

“It’s a loss for workers,” Silver Taube told San José Spotlight. “The rampant wage theft, sexual harassment and violence is going to continue, and there’s really going to be no effective recourse.”

A fast-food council could act as a model for other industries, Silver Taube said. Councils could serve as part of a multi-pronged approach to tackle ongoing labor issues that state and federal agencies struggle to address, she added.

“We have great laws. The problem is enforcement,” she said. “Employers (are) able to continue to underpay, or not pay or violate the laws. There’s no repercussions.”

San Jose Downtown Association CEO Alex Stettinski said the pause gives franchisees relief, as owners work to navigate running businesses in a post-pandemic landscape amid the region’s high cost of living. While AB 257 is flawed, he said communication between employers and employees is still needed.

“You can only afford so much before you have to close the doors because you can’t even pay the bills anymore. Conversations with your team, finding other ways to make your team feel they’re part of a family, that care goes a long way,” Stettinski told San José Spotlight. “These two perspectives have to meet in the middle somewhere.”

Hom said existing laws could be amended to address labor problems. Even if AB 257 is repealed, he said, workers still deserve to be paid fairly.

“I hope organizations have an opportunity to talk it out,” Hom told San José Spotlight. “Both sides, labor and business, (can) benefit and can come to consensus without having to pursue AB 257.”

Contact Loan-Anh Pham at [email protected] or follow @theLoanAnhLede on Twitter.