The National Labor Relations Board on Friday issued complaints against McDonald’s USA LLC as a “joint employer” along with its franchisees, alleging that workers’ rights were violated during minimum wage protests over the past two years.
The move could have broad implications for the restaurant franchise industry, effectively putting into play a definition that may hold franchisors liable for the employment practices of its franchisees.
McDonald’s USA officials described the allegations as part of a premeditated attack by unions seeking to organize fast-food workers.
“These allegations are driven in large part by a two-year, union-financed campaign that has targeted the McDonald’s brand and impacted McDonald’s restaurants,” the Oak Brook, Ill.-based franchisor said in a statement. “McDonald’s has taken the appropriate measures, working properly with its independent franchisees, to defend itself against that attack on its business.”
Attorneys for the workers making charges of unfair labor practices, however, said the complaints confirm their contention that franchisors do exert control over the employment practices of their restaurant operators.
“McDonald’s and its corporate lobbyists continue to claim that the company has no responsibility for workers at its restaurants, but today’s complaint underscores the obvious fact that McDonald’s is the boss,” said Micah Wissinger, an attorney with Levy Ratner who brought the case on behalf of McDonald’s workers in New York City. “The complaint validates what workers have been saying over and over again – that McDonald’s requires franchisees to adhere to such regimented rules and regulations that there’s no doubt who’s really in charge.”
The NLRB’s general counsel earlier this year argued that the 30-year-old standard defining the relationship between franchisor and franchisee should shift to one recognizing franchisors as joint employers.
That definition, however, has yet to be acted on by the full labor-relations board.
Many observers were expecting that confirmation to come earlier this week in a separate case involving waste-disposal company Browning-Ferris Industries that could offer clarity on the joint-employer definition.
The NLRB, however, has yet to rule on Browning-Ferris, instead moving forward with the McDonald’s complaints.
On Friday, the NLRB said 291 charges against McDonald’s have been filed since November 2012, and 86 of those cases have been found to have merit.
Attempts to settle the disputes so far have largely been unsuccessful, the NLRB said, resulting in the complaints issued Friday, though settlement discussions will continue, the board said. The NLRB indicated that 11 cases have been “resolved,” and another 71 cases remain under investigation, the board said.
Thirteen of the complaints involve 78 charges against the McDonald’s franchisees, along with McDonald’s USA as joint employers.
The restaurants fall into the NLRB regions that include Manhattan, Philadelphia, Detroit, Atlanta, Chicago, St. Louis, Kansas City, New Orleans, Minneapolis, San Francisco, Indianapolis, Phoenix and Los Angeles.
Among the charges: discriminatory discipline, reductions in hours, discharges and other coercive conduct directed at employees in response to union and protected activity.
Examples of coercive conduct included threats, surveillance, interrogations, promises of benefit and overbroad restrictions on communicating with union representatives or with other employees about unions and terms and conditions of employment.
If no settlement is reached, litigation will begin on March 30, 2015, starting in Manhattan, then later moving to Chicago and concluding in Los Angeles, the board said.
McDonald's, restaurant industry react
McDonald’s USA officials said the board’s actions “improperly and dramatically strike at the heart of the franchise system – a system that creates economic opportunity, jobs and income for thousands of business owners and their employees across the country.”
The company and its franchisees plan to contest the joint-employer allegation, as well as unfair labor practice charges “in the proper forums.”
McDonald’s argues that it provides resources to its 2,500 franchisees regarding food quality, customer service, restaurant management and other things.
That, however, does not establish a joint-employer relationship, the company said.
Industry groups agreed, saying the NLRB’s decision was driven by the Service Employees International Union, or SEIU, which has supported protests to increase the minimum wage to $15 per hour, as well as collective bargaining rights for fast-food workers.
“This is the nightmare before Christmas for local franchise businesses,” said Robert Cresanti, executive vice president of government relations and public policy for the International Franchise Association. “The board has effectively legislated a change to the definition of who an employer is, which will impact hundreds of thousands of businesses.”
Not only will the complaints spark uncertainty about the risks of franchising, Cresanti said, “It opens up potential deep-pocket lawsuits that will drive trial attorneys from all around to come at these smaller brands with bigger requests for judgment.”
Officials with the “Fight for $15” movement organizing the minimum-wage protests, however, hailed the NLRB’s action, saying the franchisor can no longer hide behind its franchise operators.
In a statement, Richard Eiker, a McDonald’s worker in Kansas City for 18 years, said, “Rather than continue to deny the obvious, McDonald’s should own up to its responsibility for its workers and pay us enough so we can support our families. Instead, the company is only fighting to keep the current system in place where wages are stuck at the bottom, even as profits grow.”