In the California Assembly’s Appropriations Committee earlier this month, legislators heard testimony for and against AB 1228 – a bill entitled the Fast Food Franchisor Responsibility Act – which would target franchised fast food restaurants statewide by making small business owner franchisees and larger corporate brands jointly liable for any labor law violations.
The Service Employees International Union (SEIU), the union behind the push to organize California’s fast food industry, argues this is necessary by alleging –inaccurately — that franchised fast food restaurants have a higher incidence of wage and hour violations.
California’s own Department of Industrial Relations keeps track of such wage claims. According to an analysis by the Employment Policies Institute, franchisee-owned fast food restaurants are responsible for just two-thirds of one percent of all wage claims in the state–less than franchised fast food restaurants’ share of employment (1.7 percent) in the state of California.
A pro-union economist brought in to argue in favor of AB1228 attempted to dismiss the state’s own data, citing a different study by anti-franchise advocate and former U.S. Department of Labor Wage and Hour Division chief David Weil. In the hearing, the economist argued Weil’s study eliminates so-called selection bias by looking at “actual violations” found instead of just claims made to the state’s labor department.
Yet again, the union case for AB 1228 is undermined by state data.
The state’s database on wage violations allows researchers to look at fines assessed for claims actually investigated by the state.
Reviewing only investigated claims – or “actual violations” where the state issued penalties against employers per the economist’s challenge – refutes the union argument. Total fines assessed against franchisee-owned fast food restaurants show these employers represent just four-tenths of one percent of all fines levied statewide. That figure is even less than franchisee-owned fast food restaurants’ share of all wage claims filed.
2 Ibid.
3 U.S. Census Bureau, 2017 Economic Census.
4 California Division of Labor Standards Enforcement BCP FY2023-24, 2-year average of 2021 and 2022 claims filed, Wage Claim Adjudication Support to Decrease Case Processing Time.
5 California Division of Labor Standards Enforcement data on FY 2021-2022 wage claims.
6 U.S. Bureau of Labor Statistics. (2021). Quarterly Census of Employment and Wages data on businesses and employment in California by industry.
Other data supports this conclusion. In a previous analysis of fast food restaurants’ responsibility for wage claims in the Golden State, the Employment Policies Institute reviewed actual lawsuits filed under the state’s Private Attorneys General Act (PAGA). PAGA removed all barriers to filing lawsuits against alleged employer violations, and has created significant financial incentives for employees and their lawyers to file complaints of this kind. In lawsuits from fiscal years 2013-2014 through 2020-2021, limited-service restaurants (fast food) accounted for just 1.5 percent of all lawsuits where awards were granted to employees, and just 1.8 percent of dollars granted to employees.
Bottom line: Time for the union and its supportive economists to take their half-baked statistical claims back to the kitchen.