Proposed ‘FAST Act’ Directly Attacks California’s Restaurant Industry – Capitol Weekly | weekly capitol
The California Legislature is back in session after its annual summer recess, and during this month there will be hearings on hundreds of measures. These include a direct assault on the restaurant industry, as well as working families faced with the dramatically rising costs of the goods and services they depend on.
Assembly Bill 257 — known as the “FAST Act” — was pushed through the legislative process under the guise of helping workers in California’s restaurant community at the counter.
If passed, the bill – sponsored by the Service Employees International Union – would override existing labor laws in favor of new rules crafted and enforced by 13 unelected politicians with no oversight.
In a typical quick service business, profit margins are narrow, approximately 6 to 9 percent.
Proponents are pushing the idea that the measure is necessary because the limited-service restaurant industry is allegedly more prone to labor law violations than other industries. That’s their story, but they haven’t yet presented any credible data to support their hypothesis.
One thing we can say with certainty is that, given the make-up of this board, labor costs would certainly increase, and at least some of those costs would be passed on to consumers in the form of prices even higher. A typical individual spends $1,200 per year on fast-casual restaurants, and the prices of ingredients and supplies are rising. As a result, the damaging inflation that all Californians are experiencing will get worse with the FAST Act.
In a typical quick service business, profit margins are narrow, approximately 6 to 9 percent. To the extent that the higher labor costs imposed by the unelected statewide council are not reflected in higher consumer prices, they will eat away at those narrow margins, forcing even more companies to close up shop and deterring other potential entrepreneurs from entering.
In short, the FAST Act will kill great jobs for workers, hurt consumers, raise prices, stifle competition, diminish entrepreneurship, and create unnecessary layers of bureaucracy – all because of a fake narrative.
In all the years of data analyzed, there was approximately one wage claim for every 1,000 private sector employees on limited duty – one of the lowest rates in the industry per employee.
Case in point: Just last week, the Employment Policies Institute (EPI) released a new study analyzing nearly a decade of California Department of Industrial Relations (DIR) data on alleged violations of employment law.
This report reviews the broadest possible scope of alleged wage and hour violations recorded by the DIR, which operates under one of the most complex and extensive labor codes in the nation. This data conclusively shows that fast food restaurants have far fewer wage demands than other industries, which undermines the case for AB 257.
Limited-service restaurants represent only 1.6% per year of total average wage claims filed with the state from 2017 to 2022. Using an adjusted dataset that includes restaurant locations potentially misclassified by the State, limited-service restaurants still average just 2.3% of all wage demands. In all the years of data analyzed, there was approximately one wage claim for every 1,000 private sector employees on limited duty – one of the lowest rates in the industry per employee.
And a process already exists to handle these claims – between DIR enforcement and existing franchise agreements, California has the strictest labor laws and highest wage laws in the nation to ensure safe working environments. durable.
If proponents of the measure needed a real problem to solve, the biggest problem is a labor shortage, with 80% of brands affected. These labor issues — even without the FAST Act — are stunting the growth of more than 75% of franchisees, with many reporting declining workforces despite many operators’ wage increases or planning to relocate. attract quality staff in the near future.
California lawmakers should celebrate and preserve local restaurants, and not fall prey to the misinformation campaign launched by AB 257 supporters, which would deeply harm local restaurants and the families who frequent them.
If we consider the real consequences of the FAST law, we can only conclude that this legislation should be abandoned for good.
Editor’s note: Jot Condie is the president and CEO of the California Restaurant Association.