By Pooja Patel and Anthony Zaller
A new proposed law, AB 1228, called the Fast Food Franchisor Responsibility Act, that targets the franchise business model is making its way through California’s legislature. At first glance, the Fast Food Franchisor Responsibility Act seems to benefit franchisees – it requires franchisors to take responsibility for complying with employment laws and share the liability of violations with franchisees. However, a deeper review reveals that this Act is not that straightforward.
1. How did the Fast Food Franchisor Responsibility Act come about?
After multiple amendments, Governor Newson signed the Fast Food Accountability and Standards Recovery Act (“FAST Recovery Act”) (AB 257) into law in September 2022. The FAST Recovery Act was supposed to go into effect on January 1, 2023, and create a 10-member Council whose purpose is to establish minimum standards on wages, working hours, and other working conditions. Notably, the Council would have the power to raise the minimum wage of fast food employees up to $22 per hour in 2023 and by up to 3.5 percent annually after that. However, a Sacramento Superior Court Judge granted a preliminary injunction preventing the FAST Recovery Act from going into effect. As a result, the FAST Recovery Act will now be on the 2024 ballot for voters to approve or deny.
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