McDonald's Lose Round One

Some businesses mis-classify their workers as independent contractors to cut costs; others use agencies to hire temporary workers who often work for years performing the same duties as permanent employees without the job security and employment benefits. Companies like McDonald’s exert a tremendous amount of control over the employment practices of their franchisees and then disavow responsibility for resulting labor violations.

“Employers like McDonald’s seek to avoid recognizing the rights of their employees by claiming that they are not really their employer, despite exercising control over crucial aspects of the employment relationship,” said Julius Getman, a labor law professor at the University of Texas. “McDonald’s should no longer be able to hide behind its franchisees.”

The general counsel of the National Labor Relations Board has ruled that McDonald’s could be held jointly liable for labor and wage violations by its franchise operators — a decision that, if upheld, would disrupt longtime practices in the fast-food industry and ease the way for unionizing nationwide. Some legal experts described it as a far-reaching move that could signal the labor board’s willingness to hold many other companies to the same standard of “joint employer,” making businesses that use sub-contractors or temp agencies at least partly liable in cases of overtime, wage or union-organizing violations.

Richard F. Griffin Jr., the labor board’s general counsel, said he found merit in 43 of the 181 claims, accusing McDonald’s restaurants of illegally firing, threatening or otherwise penalizing workers for their pro-labor activities. In those cases, Mr. Griffin said he would include McDonald’s as a joint employer, a classification that could hold the company responsible for actions taken at thousands of its restaurants. Roughly 90 percent of the chain’s restaurants in the United States are franchise operations. The fast-food workers who filed cases asserted that McDonald’s was a joint employer on the grounds that it orders its franchise owners to strictly follow its rules on food, cleanliness and employment practices and that McDonald’s often owns the restaurants that franchisees use.

lawyers for the workers asserted that considering McDonald’s influence over its franchisees, the decision merely recognized reality.
“McDonald’s can try to hide behind its franchisees, but today’s determination by the N.L.R.B. shows there’s no two ways about it: The Golden Arches is an employer, plain and simple,” said Micah Wissinger, a lawyer who filed complaints on behalf of several McDonald’s employees in New York. “The reality is that McDonald’s requires franchisees to adhere to such regimented rules and regulations that there’s no doubt who’s really in charge.”

The cases filed with the N.L.R.B. grew out of the five one-day strikes demanding a $15 wage that fast-food workers conducted against McDonald’s and other fast-food restaurants beginning in November 2012. Over 100 workers complained to the board, saying that they had been fired, had their hours cut or were otherwise punished for the protests. Throughout the debate to increase the minimum wage to $10.10 an hour, as well as the campaign to pressure McDonald’s and other restaurant chains to adopt a $15 wage floor, the companies have said that they do not set employee wages, that the franchise owners do. The N.L.R.B.’s decision would weaken that defense considerably. The Service Employees International Union, said that McDonald’s had significant control over its franchisees’ employment practices, noting that it supplies many with software telling them how many employees to use at any given hour. The workers pointed to an instance in which McDonald’s even told a franchise owner that it was paying its employees too much. The average fast-food wage is about $8.90 an hour.