Update on California Wage and Hour Bills
Topics: Wage & Hour Issues
There are two major California wage and hour bills that California employers should be aware of and monitor. We have outlined both below:
Four-Day Workweek Bill Halted
Assembly Bill 2932, known as the four-day workweek bill, was introduced earlier this year, seeking to redefine and shorten the workweek.
Current California law requires that work in excess of 40 hours in a workweek be compensated at a rate of at least one and one-half times the employee’s regular rate of pay, subject to certain exceptions. AB 2932 proposes that an employee be paid one and one-half times their regular rate of pay for all hours worked in excess of 32 hours per workweek, rather than 40.
The bill, if enacted would have also prohibited employers from reducing an employee’s regular rate of pay as a result of this reduced hourly workweek requirement. The bill exempts employers with less than 500 employees.
AB 2932 gained a lot of attention during the early part of the legislative session but failed to meet committee deadlines for consideration and therefore will not proceed this year. Nonetheless, California employers should be aware that the bill could be amended and reintroduced in 2023.
FAST Recovery Act May Give Foodservice Workers Bargaining Power
Known as the Fast-Food Accountability and Standards Recovery Act (FAST Recovery Act), Assembly Bill 257 seeks to implement a new regulatory body that would set the wage and workplace standards for workers in the fast-food industry in California.
The bill would establish the Fast-Food Sector Council, comprising 11 individuals chosen by the Governor and state legislators. The appointed body would include five representatives for state agencies that handle health, labor, and workplace safety, two workers and two employee advocates, a single representative for the franchisees, and a single representative for the fast-food corporations. The Council would hold public hearings every six months and meet in person every three years to negotiate and recommend industry-wide minimum standards regarding working conditions, training, and pay. This legislation would apply to any fast-food chain in California with 30 or more locations nationally.
The bill would also obligate fast food restaurant franchisors to oversee their franchisee’s compliance with the industry-wide minimum standards and make the franchisors liable if they failed to do so. Workers at franchise locations are generally employed by the franchisee, not the fast-food company itself. If passed, this “first-of-its kind” regulation bill would have a significant effect on franchisors, who could be held jointly liable for any violation of the Council’s recommended standards or existing labor laws.
Labor unions and proponents of AB 257 claim the bill would address long-standing issues in the fast-food industry by creating a statewide council dedicated to finding solutions. However, these invasive requirements could damage the fast-food restaurant franchise model. Opponents of the bill note that the legislation would severely harm franchise operators and increase costs, potentially leading to a reduction in hours and staff and increased costs to the consumer. In addition, California franchisors could react to this bill by cutting back on their franchising activity, resulting in lost employment opportunities.
Last June, AB 257 fell short by three votes. This year, the bill passed the state Assembly, with Legislators voting 41 to 21 in favor of the bill. AB 257is now sitting with the California Senate. The Senate Judiciary Committee’s hearing on AB 257 is set to take place at the end of the month.
CDF will continue to closely monitor AB 257 and all other key labor and employment law bills currently pending in the state legislature and provide readers with any updates. In addition, in mid-November CDF will broadcast its comprehensive webinar explaining all the new bills that are enacted so that California employers can be prepared for the new laws that go into effect in 2023. To make sure you receive CDF’s webinar notices, subscribe here.