California’s FAST Act: A Promising Move Toward Sectoral Regulation

Benjamin Sachs

Benjamin Sachs is the Kestnbaum Professor of Labor and Industry at Harvard Law School and a leading expert in the field of labor law and labor relations. Professor Sachs teaches courses in labor law, employment law, and law and social change, and his writing focuses on union organizing and unions in American politics. Prior to joining the Harvard faculty in 2008, Professor Sachs was the Joseph Goldstein Fellow at Yale Law School.  From 2002-2006, he served as Assistant General Counsel of the Service Employees International Union (SEIU) in Washington, D.C.  Professor Sachs graduated from Yale Law School in 1998, and served as a judicial law clerk to the Honorable Stephen Reinhardt of the United States Court of Appeals for the Ninth Circuit. His writing has appeared in the Harvard Law Review, the Yale Law Journal, the Columbia Law Review, the New York Times and elsewhere.  Professor Sachs received the Yale Law School teaching award in 2007 and in 2013 received the Sacks-Freund Award for Teaching Excellence at Harvard Law School.  He can be reached at [email protected]

In the Clean Slate final report, we argued that a labor law designed to enable workers to build meaningful economic and political power should require both workplace-level and sectoral collective bargaining. Sectoral bargaining is essential because it positions workers to exercise countervailing power at a level of the economy where corporate power often has its greatest force. In addition, the sectoral component of a labor relations system provides a number of particular advantages over a system that exclusively provides for workplace-level bargaining. First, sectoral agreements cover all those who work in a sector and not just those who successfully organize unions at their workplace. This means that a sectoral system expands the reach and inclusiveness of collective bargaining, extending coverage to those who historically have been excluded – often on the basis of race and gender – from labor law’s protection. Second, because sectoral agreements cover all those who work in a sector, they can address many of the hurdles that fissured work relationships pose to workplace-level organizing and bargaining. That’s because in a sectoral system it matters not whether one works for a franchisee or franchisor, or whether one works for a primary employer or a subcontractor: if you work in the sector you’re covered by the sectoral collective bargaining agreement.  Third, because wages and benefits are bargained across the entire sector, sectoral collective bargaining does not – indeed, cannot – place any one employer at a competitive disadvantage vis-à-vis any other employer in the sector. A predictable result of this last dynamic is a marked decrease in employer opposition to unionization (see, e.g., Europe) and a concomitant increase in the success rates of unionization.

As we argued in Clean Slate, securing a robust version of sectoral bargaining in the United States would require federal labor law reform through new legislation. And I’m optimistic that the Biden Administration’s newly constituted collective bargaining task force will explore the possibility of a federal sectoral bargaining law in the coming months. But, in anything like the near term, actual federal statutory provision for a new system of sectoral bargaining is unlikely. With federal reform unlikely, it would make good sense to experiment with sectoral bargaining at the state or city level. For some workers – including those not covered by the NLRA – such experimentation might actually be possible. But, in the world of robust federal labor preemption that we currently inhabit (something else the collective bargaining task force could productively consider), states and cities are probably foreclosed from crafting sectoral bargaining regimes for the vast majority of private sector employees.

Importantly, however, there are forms of sectoral regulation – distinct from sectoral bargaining – that states and cities can enact now and that could yield critical results for workers in low-wage, fissured industries. The FAST Act, currently pending in California, is a good example of such a regulation: it captures many of the advantages of the sectoral approach even though it does not provide for sectoral bargaining. David Madland at CAP has an excellent summary and review of the bill. But, in brief, the Act would establish a “Fast Food Sector Council” charged with developing and promulgating “minimum fast food restaurant employment standards, including standards on wages, working conditions, and training.” The Council is thus similar to a wage board, familiar from the Fight for $15, but with two important differences. One, the Council’s jurisdiction is sectoral by design, and, two, it has authority to set not only minimum wages but a broader set of minimum standards. The FAST Act also addresses the economic realities of the fissured nature of the fast food sector by making franchisors – the large corporations that dominate the industry (e.g., McDonalds and Burger King) – responsible for ensuring that their franchisees comply with the standards issued by the Council. It also makes franchisors liable for any violations of the Council’s standards that franchisees might commit.

The Council will be broadly representative, consisting of 11 members appointed by government officials. Five of the members would be representatives of relevant government agencies, one would be a representative of fast food franchisors, one a representative of fast food franchisees, two would be representatives of fast food restaurant employees, and two representatives of advocates for fast food representative employees. The Act has a commitment to participatory rulemaking, establishing, for example, that the Council must “hold hearings every six months that are open to the public, at which the public, including fast food restaurant employees, shall have the opportunity to be heard on issues of fast food restaurant health, safety, and employment conditions.”

The FAST Act will not facilitate unionization or enable collective bargaining (although worker organizations might take advantage of the Council as a nexus for organizational activity). But, through its sectoral design, the Act does constitute a viable and important regulatory approach to dealing with problems endemic to a fissured industry like fast food. As Madland explains, the fast food industry is heavily franchised, with the small franchisees who operate restaurants often incapable of raising standards without putting their franchise agreements and their profitability at risk. By raising employment standards across the sector – and ensuring that franchisors are responsible for compliance – the Act will simply take those employment standards out of competition. In other words, no longer will franchisors be able to insist that franchisees compete by offering wages and benefits lower that what the sectoral Council mandates. As such, the Act will ensure that fast food workers actually see improvements in minimum wages, in safety and health conditions, in the stability of their schedules and in the training that is made available to them. Moreover, the representative design of the Council and the participatory design of its procedures will guarantee that the Council determines appropriate standards based on the sector-specific knowledge base of both workers and employers. Who, after all, knows better what fast food workers need with respect to minimum wages, scheduling and training than those workers themselves? And who knows better how to identify and remedy safety and health problems than those who face such hazards?

It is an unfortunate byproduct of our overly restrictive preemption rules that California cannot enact a sectoral bargaining law for fast food workers. Should we reform the preemption regime, that kind of policy design would be possible and welcome. Until that time, however, using a sectoral regulatory approach like that contained in the FAST Act constitutes an important step forward for workers’ rights and economic equity.

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