A.B. 257, the “Fast Food Accountability and Standards (FAST) Recovery Act,” would create a new regulatory scheme for California’s fast food restaurant industry (“limited-service restaurant” or LSR, to use Census terminology). This novel arrangement is ostensibly necessary because the limited-service restaurant industry is allegedly more prone to labor law violations than other industries.

Yet a statement comparing working conditions in this industry to conditions in other industries was not included in the findings and declarations of the bill. In fact, no credible data have been presented to justify why the industry should be singled out for special regulatory attention and oversight.

This report reviews the largest-possible scope of alleged wage and hour violations as recorded by the California Department of Industrial Relations (DIR), which operates under one of the most complex, extensive labor codes in the nation. Data on wage claims by industry recorded by the state Division of Labor Standards Enforcement (DLSE) are reviewed to compare the LSR industry to all others in the state. We also present DIR data covering more than 7,600 lawsuit outcomes under the Private Attorneys General Act (PAGA), California’s unique law providing for employees to directly sue employers for labor law violations.

Key findings include:

• Limited-service restaurants account for only 1.6 percent annually of total average wage claims filed with the state Division of Labor Standards Enforcement (DLSE) for the period 2017 through 2022. (This is less than the industry’s 3.2 percent share of the overall employment in California.) The percentage of wage claims from LSR was steady over the years studied, exhibiting no notable pandemic-era spike.
• Controlling for variances in employment size in different industries, the annual average rate of wage claims in the limited-service restaurant industry is up to five times lower than other industries. Across all years of data analyzed, there was roughly one wage claim per one-thousand private sector employees in limited service–one of the lowest per-employee industry rates.
• Similarly, in lawsuits by employees alleging wage and hour violations under California’s PAGA law from FY13-14 to July FY20-21, the limited-service restaurant industry accounts for just 1.5 percent of total lawsuits in all industries where awards were granted to employees, and only 1.8 percent of all dollars awarded to employees.