Business Coalition Forms To Undo California's FAST Act (AB 257)
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Business Coalition Forms To Undo California's FAST Act (AB 257)

Business Coalition Forms To Undo California's FAST Act (AB 257)

Editor’s Note: AB 257 was signed into law on September 5, 2022, effective on January 1, 2023. However, its passage was swiftly met with a push for a voter referendum to potentially block the new law. If proponents of the referendum collect sufficient signatures to qualify for the 2024 ballot, the act cannot be implemented until voters decide, according to an article in the National Law Review.

To appear on the November 2024 ballot, referendum backers would need to submit roughly 623,000 valid voter signatures by Dec. 4 (90 days from the date of the enactment of the bill.)

The article also notes two amendments favorable to franchising were made in the final version of the bill that was passed:

1) “The most significant amendment to the Act was the removal of the joint liability provision, which made every franchisor covered by the Act a joint employer and liable for any labor code violations committed by its franchisees.”

2) “Pre-amendment, the Act also made any agreement that a franchisee indemnify a franchisor for liability under the Act void and unenforceable as contrary to public policy. The Aug. 25 Senate amendments also removed this prohibition.”

Save Local Restaurants Wants You To Help Protect QSRs in California

To date, the newly formed business coalition consists of the IFA, National Restaurant Association, and the U.S. Chamber of Commerce. From the group’s September 16th announcement:

“AB 257 not only harms California’s quick service restaurants and local franchisees, but also the very workers it claims to protect. Proponents of this legislation have indicated that similar efforts are headed for other states and industries. Now is the time to stop this bill before the harm spreads. 

“Neighborhood restaurants provide first jobs and lifetime careers, dining choice and value for hard-working Californians, and economic opportunities for underrepresented entrepreneurs across the state. The businesses singled out in this law already have strict rules in place to protect workers and consumers, but now those can be overridden by a small unelected committee. This will stifle job growth and push up prices. California consumers will be forced to pay an estimated 20% increase in food prices at counter-service establishments, which will have the greatest impact on lower-income and communities of color.

“Before these repercussions hit the state, it is only right that California voters have a say in whether they must shoulder the burden of higher prices and job losses, as small businesses are forced to limit opportunities, lay off employees or close altogether. Given less than one-third of Californians support AB 257, it is critical they have the opportunity to have their voices heard and hold their elected leaders accountable.”

1) Matt Haller, President and CEO of the IFA

“Franchising provides unparalleled opportunities to aspiring entrepreneurs, workers, and the communities they serve. The FAST Act stands to take that away while increasing prices for Californians at the worst possible time. It is only right that California voters have a say if they want to face job losses and even higher prices than they already experience before this bill crushes opportunity.”

2) Michelle Korsmo, President and CEO of the National Restaurant Association

“Restaurants are the heart and soul of the communities they serve. They are also the economic engine that supports local farmers, families, and businesses around them. When a restaurant closes, it affects the whole community. It’s important to think about cause and effect of legislation like the FAST Act. The unchecked governing council created by the FAST Act will raise prices for consumers, make it harder to afford to bring on the important people who bring hospitality to guests, and the actions of this council could push these small-business owners to close their doors for good. People shouldn’t view this as being just about quick service restaurants. The damages will extend far beyond quick service restaurants to all service businesses operating in the state and those industries that do business with restaurants. We have partnered with the International Franchise Association and the U.S. Chamber of Commerce to co-chair the Save Loal Restaurants coalition because the stakes are too high for us not to push back against this law.”

3) Neil Bradley, EVP and Chief Policy Officer of the U.S. Chamber of Commerce

“If AB 257 stands, you can be sure that this will be the first of many efforts to impose on businesses of all kinds European-style sectoral bargaining complete with government-created boards dictating how small businesses operate and how employees work. The outcome in each case will be the same as in the restaurant industry: fewer jobs, fewer choices for consumers, and higher prices for families. The Chamber is proud to stand with the International Franchise Association and the National Restaurant Association in co-chairing the Save Local Restaurants coalition and leading the effort to provide voters a chance to weigh in on this harmful legislation that is bad for California and bad for America.”

For more information or to get involved, visit the Save Local Restaurants website or email info@savelocalrestaurants.com.

Published: September 21st, 2022

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