Senate Standing Committee on Labor, Public Employment and Retirement

The Senate Committee on Public Labor, Public Employment, Retirement will come to order. Good morning. The Senate continues to welcome the public in person and via the Teleconference service. For individuals wishing to provide public comment. Today's participant number is 877-226-8163 and the access code is 161-8051. Each side will be permitted an equal amount of time. Lead witnesses will have two minutes each, and there's no reserving time for other witnesses.

All others wishing to testify must limit their comments to their name, affiliation and position on the measures. And that's it. Testimony taken via the Teleconference service will be limited to a total of 20 minutes. We're holding our committee hearings here in the O Street Building, room 2200. I think we're going to be able to establish the quorum, but we're going to ask all Members to please arrive, if they have not already. We have one Bill on today's agenda, and before we hear presentation on the bills, let's go ahead and establish a quorum. Assistant, please call the roll.

Senator Cortese. Here. Cortese. Here. Senator Wilk. Present. Wilk. Present. Senator Durazo? Senator Laird? Laird here. Senator Smallwood-Cuevas. We have a quorum.

All right. That's great. Welcome Assemblymember. Holden. You may proceed to the podium and begin when you're ready.

First of all, I want to say thank you to the chair and Members for giving me the opportunity to present today Assembly Bill 1228, as amended. That creates a path forward to resolve employer community concerns around the content of AB 257 from 2022, while preserving fast food workers hard fought efforts to secure a seat at the table and means to raise standards.

The joint liability provisions of AB 1228 will be replaced with an updated version of AB 257 Fast Food Council that will go into effect providing the referendum is withdrawn by January 1 of 2024. As many of you know, California's fast food industry employs over 556,000 Californians, the highest number of any state in the country. Of those fast food workers, nearly 70% are people of color.

We have heard fast food workers experience wage theft, violence at work, sexual harassment and assault, denial of earned sick days, intense heat, poor workplace safety practices, and retaliation for speaking out. While this does not imply that all fast food franchisees mistreat their workers, it is clear that we must ensure that our fast food workers are able to thrive in their workplaces and in their communities.

Contingent on the withdrawal of the referendum against AB 257, the amendments to AB 1228 raised the statewide minimum wage for fast food workers to $20 an hour in April of next year 2024. Thereafter, the Council may establish minimum wage wages for fast food restaurant employees that take effect on an annual basis beginning January 1, 2025. The hourly minimum wage established by the Council may increase on an annual basis by no more than 3.5%.

The Council may elect to set minimum wage standards that vary by region. AB 1228, as amended, affirms that the purpose of the Fast Food Council is to develop minimum fast food restaurant employment standards, including, as appropriate standards on wages and working conditions. The Bill ensures that there is equal representation on the Council between the fast food restaurant industry and the franchisee or restaurant owner, as well as fast food employees and employee advocates.

Finally, AB 1228 indicates that the Council does not have the authority to create or amend, which is the same as AB 257. And the Council cannot set regulations creating new paid time off benefits, such as paid sick leave or paid vacation or predictable scheduling. With me to testify is Sandra Hellerigre, who is here representing Jack in The Box in Sacramento, and she will be making a testimony and has a interpreter. I respectfully ask for your Aye vote.

All right, thank you, Assembly Member. And we'll go ahead and call the witness. And the witness will have two minutes for the primary testimony, but another two minutes for the translation. So we'll allow up to four. At four, we'll let you know if you're still testifying. Thank you. Please proceed.

With the translation, please.

Hello? Yes. Hi, I'm Joanne. I'll be translating, so good morning. I'm Sandra Jurgori. I've worked in the fast food industry for 18 years. I currently work at Jack in The Box in Sacramento. Right now, I'm also working at a laundry mat to help pay basic bills like rent and utilities. In all my time in the fast food industry, I've only been given 25 cent raises.

It wasn't until we won a statewide raise to $15 an hour that my bosses were forced to give me a decent raise. I now make 1650 an hour. Even so, the costs of everything continue to rise, and it is no longer enough. That is why I have to work two jobs to take care of my three grandsons who are living with me for the next year and pay for basic needs like food and for the Uber rides to get to my job.

Since I can't drive after getting eye surgery, a complication for my diabetes, most of my expenses go towards helping raise my grandsons. Because of that, I haven't been able to buy new shoes for work. I have to wear old shoes that are falling apart. I can deal with my old torn up shoes. But the real reason why I'm fighting for AB 1228 is for my grandsons. Time is the most precious thing we have.

Even a small increase in pay would allow for me to work few less hours and be able to spend more time with my grandsons, even if it is just to take them to the park or celebrate their birthdays together. It would make a huge difference in my life and in theirs. And who knows, maybe I could even afford to get a new pair of work shoes.

Getting 20 an hour through AB 1228 would not only make a difference in my life, but it would make a difference. But it would also help more than half a million fast food workers across California. We'll be able to provide for our families and perhaps no longer need to take on two to three jobs just to get by. We are not asking for handouts. We wake up and go to work every day and work hard every day. We're only asking for a living wage in return.

So today, I urge you to put your hand on your heart and join fast food workers in our fight to gain a seat at the table to improve our jobs and provide for our families. Vote yes on AB 1228 and support fast food workers and our families across the state. Thank you.

All right, thank you very much. Is there anyone else in the room wishes to testify and support?

Mr. Chair Members of the committee. Randy Pollack on behalf of the Save Local Restaurants Coalition, co-chaired by the International Franchise Association and the National Restaurant Association. Additionally, I am also here today as a representative of brands and local restaurant owners, and we ask your support of AB 1228. I first would like to thank the Governor, the Governor's office staff for all of their hard work in bringing the parties together for discussions over the past several months.

They spend countless hours and evenings working and finalizing the language that you see today. Also, thank you to the Legislative Council in helping draft the language the committee staff for quickly preparing an analysis for today's hearing. And, of course, Assemblyman Holden the Bill is amended we believe is in the best interest of workers, local franchise, restaurant owners and brand owners.

We are in support of AB 1228 as, most importantly, the Bill now protects the franchise business model that plays an important role in both California's economy and our local communities. As we have explained to this committee, in the past. The Franchise Business model provides opportunities for thousands of minority and other entrepreneurs to become small business owners and provide jobs for tens of thousands of workers. Specifically, AB 1228 will provide meaningful and predictable wage increases for workers.

It eliminates more significant and potentially burdensome costs and regulatory burdens targeting local restaurants in California. It provides that any findings by a fast food council will be subject to relevant state agency action and full compliance with the provisions of the California Administrative Procedures Act. And lastly, it prevents a costly ballot measure fight to overturn AB 257. In the end, did each side get all the things they wanted? Of course not.

But we believe AB 1228, as amended, provides the certainty that restaurant business owners need while continuing to provide jobs for many in California. For these reasons, we urge your aye vote on AB 1228 as amended. Thank you.

Thank you very much. This would be an opportunity for anybody else who's in support to just do a me too at the podium. Is there anybody else in the hearing room that is in support?

Kimberly Rosenberger with SEIU Proud co sponsors. Thank you.

Thank you very much. Seeing no one else, this would be the opportunity for any we have no listed lead witnesses in opposition. This would be the opportunity for anybody in opposition in the room to express their opposition. Seeing no one, then we'll now go to the moderator where we could hear from anyone with a me too in support or opposition. Moderator welcome to the committee.

Thank you. If you're in support or opposition of AB 1228, you may press one, then zero. We will go to line number nine. Your line is open.

With the California School Employees Association. We're in support of AB 1228. Thank you.

Thank you. And Mr. Chair, we have no further support or opposition. Thank you.

All right, thank you very much. We'll bring it back to the committee for comments or questions. Yes, Senator Smallwood Cuevas and then Senator O'Leary.

Thank you, Mr. Chair. And I just want to thank the author for the hard work that has gone into this. I remember when this came to us in committee, and it was a different atmosphere in this room, in some ways hard to understand, when we were just talking about making sure that the basic rights of workers are respected and that there was an opportunity for this industry to be lifted up in terms of standards.

So it is such a wonderful thing to be here today and to hear from the business community, and then, of course, to hear the powerful words of the hero she wrote that is sitting in the audience who shared her story and the millions of workers. We know that this is going to touch not just in fast food, but in all industries, because when you lift the bottom, everything on top has to be elevated. So I'm so excited to support this Bill, and I'm looking forward to the vote, and I want to move the motion when it's time.

Thank you, Senator Laird.

I was actually going to do most of what was just done. So the one additional comment I would make, and I associate myself with everything that was said by Senator Smallwood quavis is that a lot of us, as the previous incarnation of this Bill passed through and passed through judiciary where I sit, took a lot of criticism for supporting it, even though it probably needed some work. And yet doing that helped us arrive at this moment.

And I think that's an important thing to note is sometimes I will vote for a Bill and people say, you know, that that Bill might have had some flaws. And I said, yes, but it'll force the discussion. And I think this is a winning outcome for everyone just all the way, with the liability going one way, the minimum wage coming in, the ballot measure going away. And I think sort of forcing the issue allowed us to get to this point. And so I would just like to acknowledge that and look forward to voting for the motion.

Thank you, Senator. Senator Durazo.

Thank you, Mr. Chair. I won't repeat everything that my colleagues have said, but they're right on. And to see this enormous progress that was made with the employers, with the industry, with the union, with the workers, with the author, and with the Governor, I'm glad that reference was made to the Governor for his role in all of this. But we could take on some pretty amazing issues when this is done... Congratulations to everybody.

Senator Wilk.

Thank you, Mr. Chair. I will not be echoing what my fellow committee Members said. Just a couple of things real quickly. I mean, obviously, these issues are complicated and you really can't do it publicly in a committee process. But for me, I think it's important that all stakeholders are at the table. And if the Chair would indulge me, I received an email from a constituent of mine and I would like to read it should not take too long. And then, please, I'll conclude with that.

Thank you, sir. I'm writing to contest the process and oppose AB 1228. This Bill has been negotiated in secret, set for a hearing that no one could oppose this Bill as amended. Franchisees are heavily impacted by this Bill, but were excluded completely from the process. No franchisees only organizations were invited or included in any discussions. As background, I've been a franchisee in California for 35 years.

I'm a past chair and current Director of the Coalition of Franchisees Associations, which was the sponsor of Franchise Bill AB 525 passed in 2015, which the author and I worked on. The current Director of public affairs and engagement for the American Association of Franchisees and Dealers, which was the sponsor of AB Six Seven Six, which was passed last year. I also consult with many franchise organizations. The National Owners Association, which is the independent franchisee association of McDonald's, is just one of 20 association Members of CFA.

None of these organizations were involved. In fact, it was all kept secret from them. And here we are on September 11 finding that the Bill has been modified and an analysis done and set for a vote the next day. It's backroom politics at its worst. So with that, I will be voting no today, and I appreciate you indulging me.

Thank you, Senator Wilk. Obviously, you're entitled to the floor, appreciate everyone else's comments overall. I just want to say what I think is three things. First of all, congratulations to the author for getting us to this point, and of course the workers themselves, and of course the union that represents most of them. SEIU or would like to represent many of them. But who was behind the Bill? Obviously, everyone knows that.

The other side of it, though, is I want to go back to the committee's work here that goes back to last session. And it was heartening to hear significant pieces of what this committee staff recommended.

I almost wanted to reach over and pat our chief consultant on the back, and say, as you were describing portions of the Bill that are important in terms of checks and balances, in terms of equal representation on this council, many of those, as you know, as an author, weren't in the Bill.

The previous version of the Bill that came forward 257, and a lot of work was done here to try to send the Bill along, as Senator Laird indicated, in better shape, if you will, knowing that more work had needed to be done. We acknowledged that at the time and more work has been done, but a lot of that happened because I guess what you would call the opposition.

But I'm just going to call the business community, actually people who represent franchisees, franchisees themselves and of course the consultants and so forth in Sacramento that represent everyone came to the committee staff early and often and to me as a chair and said, we're looking for a path. We want to make sure we don't have unintended consequences here. We have legitimate concerns, and I want to give them credit.

And I know, I assume as the author, you engaged a lot of those same conversations, but they were more than conversations. They were hard and fast recommendations that came along. And I know our committee, our committee staff appreciated that very much. It's not that often on a contentious Bill that we get all the parties in early. And again, I'm hearkening back to last year.

I can't really comment on who is all exactly at the table on this AB 1228 that we're hearing today, but clearly enough folks were at the table as my colleagues outlined, to reach a global settlement. You don't do that without all parties at least represented at the table to make some of these contentious issues go away. So congratulations, not just to the author and the advocates, but to everyone for getting us to a place here where I think what you're hearing is we're all supportive. And with that, Mr. Holden ask you to go ahead and close if you're ready to do that. Sure.

Well, first of all, Chair, I want to say thank you to you and to this committee and really to the Senate. When the first iteration, last year's, Bill 257 came out of the Assembly, I made, as well as the sponsors, commitments to the Members of my House that we would work hard on this Bill. It was clear as we were moving it forward, there was still work to be done.

And a good deal of what we have before us today is the framework that this committee and the Senate ultimately supported in 257 last year represents. This is my 11th year here. And this is probably one of the finer examples of how a Bill that is a very consequential Bill that has clear impact on uplifting those who are in need of that happening. And ultimately, I think, doing good work to even protect the franchisees as we move forward to what's before us today.

In 1228, joint liability is out. Private right of action is out. Things that were brought up as additional challenges for the opposition. I will say, too, though, that even last year, I think from this committee, there was a recognition that joint liability needed to be taken out of that Bill 257. But let me just say, based on where we are now, without spending too much time on the past, but the past can be prologue.

Sometimes we look at what happens in the past and we say, well, in the future, if we didn't do it right, then maybe it comes back to bite us later. But sometimes when we do, good can be played forward. And I think with the stakeholders coming together, as was described, the coalition of business organizations, labor, and of course, the cornerstone of this Bill, the workers, I think we've got a really good outcome. Is it a perfect outcome?

I don't think anyone will argue that they got more than anyone else. But at the end of the day, the ball moves forward. There's progress. And I think there's something that's in place now that, once again, California can take pride in and say, this is a model that will sunset in 2029. But between now and then, we can just see with this experiment just how beneficial I think it's going to be for all parties concerned.

So I want to thank you again as chair and this committee for your support for our wonderful advocates who are citizens and workers in this great state who found the need to sleep out in front of this capitol last year to make sure that their voices were being heard. And we just celebrate that today as well. And for the hard workers who call themselves and who are franchisees and small business owners who create this opportunity for workers to have a job, we celebrate them, too.

Takes great courage to be an entrepreneur and step out and put it all on the line so they're to be celebrated. And I hope that they will see the value in what ultimately is the Bill before us in 1228. And I respectfully ask for your aye vote.

It sounds like we have some aye votes here for you, Assembly Member. So with that, we do have a motion by Senator Smallwood Cuevas, correct? And with that, we can go ahead. And call the roll

File item number one, AB 1228. The motion is due pass. But first, we referred to the Committee on Appropriation. Senator Cortese? Aye. Cortese, aye. Senator Wilk? No. Wilk no. Senator Durrazo Durazo. Aye. Senator Laird? Aye. Laird, aye. Senator Smallwood Cuevas. Aye. Smallwood Cuevas aye. This Bill is out on a four to one vote.

All right, the Bill is out on a four to one vote. Again, congratulations to all concerned and this committee hearing is now adjourned.