Bill Text: CA AB1228 | 2023-2024 | Regular Session | Introduced
Bill Title: Fast food restaurant franchisors and franchisees: joint liability.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed) 2023-06-01 - In Senate. Read first time. To Com. on RLS. for assignment. [AB1228 Detail]
Download: California-2023-AB1228-Introduced.html
CALIFORNIA LEGISLATURE—
2023–2024 REGULAR SESSION
Assembly Bill
No. 1228
| Introduced by Assembly Member Holden |
February 16, 2023 |
An act to add Section 2810.9 to the Labor Code, relating to employment.
LEGISLATIVE COUNSEL'S DIGEST
AB 1228, as introduced, Holden.
Fast food restaurant franchisors and franchisees: joint liability.
Existing law, which is suspended pursuant to a referendum petition, establishes, until January 1, 2029, the Fast Food Council within the Department of Industrial Relations and prescribes its powers. Existing law requires the Fast Food Council to promulgate minimum fast food restaurant employment standards, including standards on wages, working conditions, and training, and to issue, amend, and repeal any other rules and regulations, as necessary to carry out its duties, subject to a petition signed by 10,000 fast food restaurant employees approving the creation of the council, as specified.
This bill would require that a fast food restaurant franchisor share with its fast food restaurant franchisee all civil legal responsibility and civil liability for the franchisee’s violations of prescribed laws and orders or their implementing rules or
regulations. The bill would authorize enforcement of those provisions against a franchisor, including administratively or by civil action, to the same extent that they may be enforced against the franchisee. The bill would require that a franchisor have the opportunity to cure a violation after written notice, as prescribed, before civil action may be commenced. The bill would provide that a waiver of the bill’s provisions, or any agreement by a franchisee to indemnify its franchisor for liability, is contrary to public policy and is void and unenforceable. The bill would authorize a franchisee, if the terms of a fast food restaurant franchise prevent or create a substantial barrier to the franchisee’s compliance with the prescribed laws and orders and their implementing rules and regulations, or any changes to them, to file an action against its franchisor for monetary or injunctive relief necessary to ensure compliance. The bill would establish a rebuttable presumption that any changes in the terms of a
franchise that increase the costs of the franchise to the franchisee create a substantial barrier to compliance with the prescribed laws and orders and their implementing rules and regulations, or any changes to them. The bill would define terms for its purposes.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
This act shall be known, and may be cited, as the Fast Food Franchisor Responsibility Act.SEC. 2.
The Legislature finds and declares the following:(a) The fast food restaurant industry has long been rampant with employment law violations, including wage theft that includes violations such as minimum wage, overtime, off-the-clock, and meal break violations, sexual harassment and discrimination, and workplace injuries and violence.
(b) Franchisee-owned fast food restaurants experience systematically higher levels of noncompliance with minimum wage and overtime than do comparable establishments owned and managed by the franchisor.
(c) The franchise model under which those fast food restaurants are operated
contributes to the high rate of employment violations. Fast food franchisors wield substantial financial, informational, and legal power relative to their franchisees. Fast food restaurant franchisors control, or exercise substantial control and oversight over, many aspects of their franchisees’ operations, including as documented in the terms of their franchise agreements. Fast food restaurant franchisors’ ability to impose strict franchise terms and conditions on franchisees that siphon profits to the franchisors and restrict franchisees’ business operations directly impacts those franchisees’ ability to pay, support, and protect their workers. The pressure these conditions place on franchisees’ profit margins increases the likelihood that franchisees will have difficulty complying with regulatory protections.
(d) Despite their contributions to the problem, fast food restaurant franchisors often avoid liability, and disavow any
responsibility, for the employment violations affecting the fast food restaurant workers in their franchised stores.
(e) Franchisors must take greater responsibility for achieving compliance with employer laws throughout their franchise networks. Requiring fast food restaurant franchisors to share in the liability for employment violations at their franchised stores will appropriately allocate the costs and risks of liability for employment violations across the responsible parties, incentivize franchisors to do their part to ensure and enable compliance with employment laws in their franchised stores, and ensure that harmed individuals can receive a full recovery.
SEC. 3.
Section 2810.9 is added to the Labor Code, to read:2810.9.
(a) A fast food restaurant franchisor shall share with its fast food restaurant franchisee all civil legal responsibility and civil liability for the fast food restaurant franchisee’s violations of any of the following laws and orders or their implementing rules or regulations:(1) Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code.
(2) Article 1 (commencing with Section 12940) of Chapter 6, and Chapter 10 (commencing with Section 12999), of Part 2.8 of Division 3 of Title 2 of the Government Code.
(3) (A) Article 1 (commencing with Section 200)
and Article 1.5 (commencing with Section 245) of Chapter 1 of, and Chapter 2 (commencing with Section 300) and Chapter 3 (commencing with Section 350) of, Part 1 of Division 2.
(B) Chapter 1 (commencing with Section 500) of Part 2 of Division 2.
(C) Chapter 1 (commencing with Section 920), Chapter 2 (commencing with Section 970), Chapter 3 (commencing with Section 1010), Chapter 3.1 (commencing with Section 1019), Chapter 3.6 (commencing with Section 1024.5), Chapter 3.8 (commencing with Section 1030), Chapter 3.9 (commencing with Section 1040), Chapter 4 (commencing with Section 1050), Chapter 5 (commencing with Section 1101), and Chapter 11 (commencing with Section 1139) of Part 3 of Division 2.
(D) Part 4 (commencing with Section 1171) of Division 2.
(E) Article 1 (commencing with Section 2260), Article 3 (commencing with Section 2350), and Article 5 (commencing with Section 2440) of Chapter 1 of Part 9 of Division 2.
(F) Part 13 (commencing with Section 2698) of Division 2.
(G) Chapter 1 (commencing with Section 6300), Chapter 2.5 (commencing with Section 6360), Chapter 3 (commencing with Section 6400), and Chapter 4 (commencing with Section 6423) of Part 1 of Division 5.
(4) Orders, including emergency and executive orders, issued by the Governor regarding employment standards, worker health and safety, or public health and safety.
(5) Orders issued by a county or municipality regarding employment standards, worker health and safety, or public health and safety.
(b) (1) The laws, orders, rules, and regulations in subdivision (a) may be enforced against a fast food restaurant franchisor, including administratively or by civil action, to the same extent that they may be enforced against the fast food restaurant franchisor’s franchisee.
(2) No civil action may be commenced against a fast food restaurant franchisor under this section prior to 30 days after written notice of the alleged violation of any of the laws and orders set forth in subdivision (a), or their implementing rules or regulations, has been given to the fast food restaurant franchisor by a person commencing the action. That time period shall be extended to 60 days if a fast food restaurant franchisor, within 30 days of receiving a written notice, makes a written request to the noticing person for additional time to complete an investigation.
(3) A fast food restaurant franchisor shall not be liable in a civil action under this section if the fast food restaurant franchisor cures the alleged violation within the applicable time period in paragraph (2). For purposes of this subdivision, “cure” means that the fast food restaurant franchisor abates each violation alleged and ensures that its fast food restaurant franchisee is in compliance with the underlying laws, orders, rules, or regulations specified in the notice, and that any fast food restaurant workers against whom a violation was committed are made whole.
(c) A waiver of this section, or any agreement by a fast food restaurant franchisee to indemnify its fast food restaurant franchisor for liability under this section, is contrary to public policy and is void and unenforceable.
(d) (1) If the terms of
a fast food restaurant franchise prevent or create a substantial barrier to a fast food restaurant franchisee’s compliance with the laws and orders set forth in subdivision (a) and their implementing rules and regulations, or any changes to them, including, but not limited to, because the franchise does not provide for funds sufficient to allow the fast food restaurant franchisee to comply with the laws, orders, rules, and regulations, or any changes to them, the fast food restaurant franchisee may file an action against its fast food restaurant franchisor for monetary or injunctive relief necessary to ensure compliance.
(2) There shall be a rebuttable presumption that any changes in the terms of a franchise that increase the costs of the franchise to the fast food restaurant franchisee create a substantial barrier to compliance with the laws and orders set forth in subdivision (a) and their implementing rules and regulations, or any changes to
them.
(e) For purposes of this section:
(1) “Fast food chain” means a set of restaurants consisting of 100 or more establishments nationally that share a common brand, or that are characterized by standardized options for decor, marketing, packaging, products, and services.
(2) “Fast food restaurant” means any establishment in the state that is part of a fast food chain and that, in its regular business operations, primarily provides food or beverages in the following manner:
(A) For immediate consumption either on or off the premises.
(B) To customers who order or select items and pay before eating.
(C) With items prepared
in advance, including items that may be prepared in bulk and kept hot, or with items prepared or heated quickly.
(D) With limited or no table service. Table service does not include orders placed by a customer on an electronic device.
(3) “Fast food restaurant franchisee” means a person to whom a fast food restaurant franchise is granted.
(4) “Fast food restaurant franchisor” means a person who grants or has granted a fast food restaurant franchise.
(5) “Franchise,” “franchisee,” and “franchisor” have the definitions set forth in Article 1 (commencing with Section 20000) of Chapter 5.5 of Division 8 of the Business and Professions Code.
