Joint Employer Liability for Franchisor and Franchisee
The Fast-Food Accountability and Standards Recovery Act (“FAST”) creates minimum standards of working conditions for fast food workers, and allows the Labor Commissioner to enforce standards for both franchisor and franchisee. Courts have held that a franchisor is liable for the conduct of the franchisee only if the franchisor actually exercised control, or is reasonably believed to exercise control over the means and manner of the franchisee’s operation that caused the plaintiff’s alleged injury.i FAST circumvents the previous standard and allows the Labor Commissioner to have wide power and discretion to allege joint liability for both franchisors and franchisees.
AB 257
FAST applies to fast food chains, defined as 100 or more establishments sharing a common brand, or having standardized options for decor, marketing, packaging, products, and services.ii FAST established the Fast Food Council (“Council”) within the Department of Industrial Relations until January 1, 2029. Composed of ten members, this Council has authority to impose sectorwide minimum standards on wages, working hours, and other working conditions related to health, safety, and wealth of fast food restaurant workers. The Council considers the necessary cost of proper living, as well as promotes interagency coordination and prompt agency responses regarding fast food workers’ working conditions. If there is a conflict between the Council’s standards, rules, or regulations with another state agency, the Council’s determination is favored.iii The Council’s standards does not supersede standards set by certain valid collective bargaining agreements as defined by FAST.iv
Except for violations enforced by the Division of Occupational Safety and Health and claims enforced by the Civil Rights Department, FAST allows the Labor Commissioner to issue citations or file a civil action against a franchisor and franchisees for failing to meet the standards imposed by the Council.v This conflicts with previous standards set for joint employer liability requiring that the franchisor actually exercised control or reasonably believed to exercise control.vi With FAST, the Labor Commissioner has wide discretion to impose liability for both franchisors and franchisees.
This bill also creates a private right of action prohibiting fast food restaurant operators from discharging, discriminating, or retaliating against any fast-food restaurant employee including, but not limited to: (1) complaining or disclosing information to a person of authority at the fast food restaurant, (2) participating in proceedings relating to employee or public health and safety, or (3) refusing to perform work the employee believes would violate worker or public health and safety laws.vii
Takeaways for Employers
Due to the complexity of the bill, fast food franchisors and franchisees should seek counsel to ensure compliance moving forward.
For guidance, please reach out to the attorney at Palmer Kazanjian Wohl Hodson, LLP.
i See Patterson v. Domino’s Pizza, LLC, 60 Cal. 4th 474 (holding that a franchisor may be liable for actions of the franchisee’s employees only if it retained or assumed a general right of control over factors including hiring, direction, supervision, discipline, discharge and other relevant day-to-day workplace conditions of franchisee’s employees); Salazar v. McDonald’s Corp., 944 F. 3d 1024 (9th Cir. 2019); see also Cal. Civ. Code § 2300; Cal. Corp. Code § 31005(a).
ii Cal. Lab. Code § 1470.
iii Cal. Lab. Code § 1471.
iv Id.
v Id.
vi Patterson, 60 Cal. 4th 474; Salazar, 944 F. 3d 1024.
vii Id.