Court Slows The FAST Act, But Business Exodus Could Accelerate

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Predictions that California’s Fast Food Accountability and Standards Recovery Act, or FAST Act, could set off a round of restaurant closures were not wild guesses, attempts to spread fear or the reckless hyperbole of selfish big business. They were in fact right on the mark.

The FAST Act (AB257), which was scheduled to go into effect Jan. 1, “makes it all but impossible to run small business restaurants” in California, says Joe Erlinger, president of McDonald’s USA, in an open letter that appears on the company’s corporate website.

The top of the Jan. 25 letter, which is labeled as an “article,” says “California keeps looking for ways to raise prices, drive away more businesses and destroy growth through bad policy and bad politics.”

Under AB257, a Fast Food Sector Council, made up of 10 members appointed by the governor, Assembly speaker, and the Senate Rules Committee, would work under the umbrella ​​of the state Department of Industrial Relations. Erlinger describes it as “​​an unelected council of political insiders, not local business owners and their teams.”

This group would be free to “prescribe” its own powers to follow its mission to “promulgate minimum fast food restaurant employment standards, including standards on wages, working conditions, and training, and to issue, amend, and repeal any other rules and regulations.” Its authority is without precedent.

For now, fast food restaurants are operating as they were in 2022. In late December, not even two days before the legislation would take effect, Sacramento Superior Court Judge Shelleyanne W.L. Chang placed a hold on it, temporarily restraining the state “from implementing, enforcing, or taking any other action to effectuate Assembly Bill 257.” Bill opponents argued that legislation has never before been allowed to take effect while signatures to place it before the voters were being verified. The court sided with them.

It will next be up to voters to decide if the legislation becomes law. The FAST Act will be on the November 2024 ballot, where it faces an up-or-down proposition in a veto referendum.

Even in its state of uncertainty, AB257 has inspired imitators in New York and Virginia, “setting up a fight over how far unions and politicians should go to protect workers’ rights and whether workers are even the center of this battle,” USA Today reports.

That “whether” clause is key. Opponents have said that AB257 is centered not on workers but is “an under-the-radar attempt by politicians to increase unionization,” which continues to falter. The portion of workers who belong to unions is half of what it was four decades ago, and far off its peak of the mid-1950s, when more than a third of the workforce was unionized.

The California Department of Finance seems to have reservations, as well, but of a different sort. Its analysis of AB257 says that while cases of “enforcement, rulemaking, and appeals” would be increased by the legislation, “​​it is not clear that this bill will accomplish its goal, ​​as it attempts to address delayed enforcement by creating stricter standards for certain sectors, which could exacerbate existing delays.” In other words, the bureaucratic caseload would overwhelm state administrative functions.

The final analysis, though, will be that of the voters, who for the next 21 months will be hearing it from both sides, and maybe thinking about their decision on occasion as they pick up their order from the fast-food drive-through window.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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