Governor Newsom’s AB 257 Stamp of Approval Will Hurt California Consumers, Workers and Small Businesses

Newsom Signs Into Law Reckless Bill that Will Increase Costs 20% For CA’s Restaurant Goers Without Improving Existing Worker Protection Apparatus to Pay for Unelected Union Bureaucracy

SACRAMENTO–(BUSINESS WIRE)–The campaign to Stop AB 257 issued the following statement today in response to Governor Newsom signing into law Assembly Bill 257, the so-called Fast Food Accountability and Standards Recovery (FAST) Act:

“By signing AB 257 into law, Governor Newsom has not leveled the playing field but instead targeted one slice of California’s small businesses and consumers who rely on counter service restaurants to feed their families. As individual employers and neighborhood restaurants across the state, we will use every tool at our disposal to protect our consumers, workers, and other job providers from the pain and havoc that will result from enacting this bill.

“In the midst of record inflation, consumers and small business owners will pay a 20 percent increase to fund the outsourcing of the legislature’s duties to union-led bureaucracy. California’s own Department of Finance said AB 257 will only add more burdensome costs to the taxpayer funded government without any actual certainty that it will fix anything.

“By arbitrarily singling out a sliver of the restaurant industry, California’s approach imposes higher costs on one type of restaurant while sparing others, putting some workers at a disadvantage and picking clear ‘winners’ and ‘losers.’ Governor Newsom ignored the arbitrary and haphazard nature of this bill and signed into law a reckless precedent which will have far-reaching harmful impacts beyond the state’s borders.”

Businesses Share Their Concerns:

“As a McDonald’s franchisee of more than 20 years, I’ve had the opportunity to open doors for thousands of employees and their families by offering competitive wages, benefits, and an inclusive work environment,” explained Harris Liu, a Sacramento-based McDonald’s franchisee. “My people are the backbone of my business and will always come first. But instead of endorsing legislation that benefits all workers, Governor Newsom is creating an unequal playing field that threatens small business owners and communities across the state. Our elected leaders can and must do better.”

“By signing this bill, Governor Newsom has chosen winners and losers- and has left me, a restaurant franchisee, holding the bag for whatever this unelected council throws at me. Our restaurant business model has afforded so many women and minority entrepreneurs a higher rate of business ownership across the state,” said Jesse Lara, El Pollo Loco franchisee in Southern California. “Californians are already suffering under the weight of inflation and the FAST Act will make it harder to live, work, and own a business in the state.”

“By signing this bill, Gov. Newsom is siding with special interests rather than the people and small businesses of California. This bill has been built on a lie, and now small business owners, their employees, and their customers will have to pay the price,” said Matthew Haller, President and CEO of the International Franchise Association. “IFA continues to hear over and over how local franchises do not know how they will be able to make it once this bill goes into effect. Underrepresented communities will be hit hardest. The FAST Act was designed to hurt the franchise business model in California, and that is what it will do. IFA will not stop fighting to ensure other states won’t suffer from the harm that California has started.”

“This lopsided, hypocritical and ill-considered legislation hurts everyone. Many economists who have studied this issue agree this bill is problematic, as has the state’s own Department of Finance,” said Joe Erlinger, President of McDonald’s USA, in an open letter. “Proponents of this bill have made it clear they want to see it expand across the country…Rather than asking for what many have decried as the ‘California Food Tax,’ those who count on a thriving restaurant industry—workers, owners and customers— should be asking lawmakers to only consider legislation that benefits all.”

“It’s just not possible to improve a bill that was always based on false statements, statements that are refuted by the state’s own data. This was a bad bill the day it was written and remains a bad bill today,” said Jot Condie, President & CEO, California Restaurant Association. “If its proponents were truly concerned about the well-being of workers, they would put their efforts into funding and strengthening the state agencies that are busy enforcing existing labor law. They could give more resources to Cal OSHA, or the Department of Industrial Relations. Instead, they are creating a new mechanism for unionizing restaurants via an untested state lawmaking body – one that is not elected but made up of political appointees.”

AB 257 Isn’t Supported by Californians, Economists, or the Data

Last week, the U.S. Black Chambers, Inc. (USBC), the National Asian/Pacific Islander American Chamber of Commerce and Entrepreneurship (National ACE), and the National LGBT Chamber of Commerce (NGLCC), in partnership with the California Black Chamber of Commerce and the CalAsian Chamber of Commerce, sent a letter to members of the senate to express their concerns regarding the bill. As these organizations highlight in their letter, “not only do franchise models provide minority entrepreneurs with uncharted economic opportunity, but the franchise model represents a key pathway towards achieving the American Dream while also generating employment, revenue, and opportunity for their immediate communities.” This bill will cause irreparable harm to minority-owned companies, their operators and families, and the very workers the backers of this bill seek to support.

Given that AB 257 will increase costs for consumers and harm local businesses, it’s no surprise less than one-third of Californians support this bill. Additionally, support for AB 257 is down a full 10 points since March 2022, according to a new RG Strategies survey.

The Employment Policies Institute released a new survey of U.S. labor economists, which found that 83 percent oppose AB 257. The survey reflects economists’ deep concerns about the negative impacts of this bill on fast-food industry growth, jobs, and price inflation.

AB 257 is also based on the flawed premise that working conditions are worse in counter-service restaurants than other food sector establishments, which is why they are being singled out by this bill. But a recent analysis suggests this assertion is categorically false and not supported by the state’s own data.

To speak to a small business owner who will be impacted by AB 257, please contact Patrick George at (916) 202-1982.

Contacts

Patrick George

(916) 202-1982