Last September, California Governor Gavin Newsom signed into law a new law, AB 257, or the Fast Food Accountability and Standards Recovery Act. This has significant regulatory implications for the state’s fast food industry.
Small business owners will love the new law.
why? The law, which takes effect January 1, requires fast food establishments (including many independent restaurateurs, franchise owners and other small businesses) to respond to the newly formed commission. , “Sets minimum standards for workers in the industry, including wages, health and safety-related conditions, workplace safety, the right to take time off from work for protected purposes, and protection from discrimination and harassment.”
We recognize that statements like this can make any business person shudder.
Called the Fast Food Council, the committee is made up of 10 representatives of fast food workers, franchisees, franchisors, and politicians appointed from the Governor’s Office of Business and Economic Development and Labor Relations.
The council is empowered to make recommendations to the legislature on working conditions and wages, including potentially significant minimum wage increases, and the law requires the legislature to comply with these recommendations.
As you can imagine, the fast food industry is in crisis. McDonald’s U.S. President says the bill could “raise the minimum wage to $22 an hour” and could “hurt everyone.” The U.S. Chamber of Commerce said the bill “imposes joint and several liability on franchisors for alleged violations by franchisees, and franchisors would necessarily operate individual locations that are separately owned and operated by the franchisee.” will have to play a more direct role in the ”
Chipotle’s CEO said the bill “is disappointing because it will also affect our economic model, and it is disappointing because it could affect the number of restaurants that will open in states like California in the future.”
So will this bill force fast food operators to leave California? Probably not. Will the price go up enough that people won’t buy Big Macs anymore?
The bill has scared many businesses. Because if this bill stays in place (the industry could have gathered enough signatures to overturn the bill in a statewide referendum), it would spread to other states and affect other industries. Because it is possible. But now I’m wondering: is this such a bad thing?
Perhaps allowing an independent council to determine wages would be a good compromise for the industry and would create a more level playing field. may help attract more talent and reduce turnover. At the very least, it may help reduce the number of hairs that are routinely found on chicken nuggets.
Businesses have always fought governments over regulation. Billions of dollars are spent each year on lobbyists who defend industry priorities and freedom to operate. An equal amount will be spent by unions and labor advocates representing constituencies.
Some industries are forced to self-regulate (meaning workers have little or no voice). Some countries are subject to excessive government oversight. Politicians are bought and sold according to campaign bank account balances and the current election cycle. Priorities change with each new administration. There is no balance.
The Fast Food Council may become a model for such balance. and the government can stop this war. Assuming the commission fairly represents the interests of workers, governments, and businesses, this quasi-independent body would be able to mutually agree on rules affecting the industry, thus minimizing potential abuse and political shenanigans. can be reduced to
In this model, the government is essentially pushing oversight over the industry to a group of better and more experienced people saying, “Hey, if you guys decide, we’ll follow.” In contrast to politicians who are only interested in getting elected, this group of both workers and owners have a mutual interest in the industry’s success.
This is politics, so there is plenty of room for abuse. Anyway, who exactly are these appointees from the Governor’s Office of Business and Economic Development and Industrial Relations? How are other representatives “appointed”? How does the committee itself operate? Why does she have 10 members and not more (or less)?Lobbyists, unions and big business direct their persuasion efforts (i.e. money) to these legislators and not to state legislators. Who would order a “Junior” Whopper?
These issues need to be resolved, and more concise rules need to be established. Sorry fast food folks, your industry is going to be the guinea pig for this one.
However, if California’s political leaders are flexible and willing to propose future amendments to AB 257 to make the council more effective and independent, and industry and labor representatives If both are willing to commit to this model, it’s a better approach. Governments and businesses work together to avoid government interference.
Yes, no. But it’s worth a visit.
Gene Marks is the founder of The Marks Group, a small business consulting firm. He frequently appears on CNBC, Fox Business and MSNBC.