Quick Hit Ellyn Fortino Tuesday July 29th, 2014, 7:06pm

NLRB Finds McDonald's Liable For Actions Of Franchisees; Fast Food Movement Applauds

The National Labor Relations Board's general counsel decided Tuesday that McDonald's can be declared a "joint employer" with its franchise owners in unfair labor practice complaints filed by workers, a preliminary ruling that is a big win for the fast food giant's employees, who are fighting for $15 an hour and a union.

Today's decision by the NLRB's general counsel "shows that McDonald's can no longer hide behind franchisees for illegal treatment of workers," said Kendall Fells, organizing director for the Fast Food Forward workers campaign. "The federal government has found sufficient evidence to charge that McDonald's plays a key role in employment decisions at its stores ... It's clear to workers in these stores that the real boss is really McDonald's, and now, the NLRB general counsel has recognized that as well."

Regional directors in NLRB offices across the country have been informed to determine the merit of unfair labor charges brought against McDonald’s and its franchisees in various cities since November 2012, when fast food workers in New York participated in the first strike against the fast food industry. The more than 100 complaints brought against McDonald's allege, among other things, that workers were retaliated against after taking part in organizing efforts. 

"And where they find merit to these charges, they are to name McDonald's as an employer," explained Micah Wissinger, an attorney at Levy Ratner, P.C. who brought some of the cases on behalf of McDonald’s workers in New York City. 

"This news makes it clear that the NLRB's general counsel office, they find merit to the claim that McDonald's, which is a $5.6 billion company, is indeed an employer that exerts substantial power over their employees' working conditions, even in these franchise stores," he said. "Despite McDonald's repeated assertions that they do not control employment decisions at the franchise level, and they attempt to shirk their responsibility for the poor working conditions and the low wages of their workers, the reality is that McDonald's requires their franchises to adhere to incredibly regimented rules and regulations, and there's really no doubt who's in charge."

About 12,500 of the approximately 14,000 McDonald's stores in the United States are owned by franchisees. 

Back in March, seven class action lawsuits were also brought against McDonald's and some of the hamburger chain's franchisees by workers in California, Michigan and New York, alleging various "unlawful pay practices." The allegations range from failing to provide workers with proper overtime compensation to forcing employees to work off the clock.

"Combined, today's charges and the lawsuits strike at the heart of the low-wage fast food business model, which passes the buck onto franchisees for treatment of workers while companies rake in huge amounts of profit," Fells said. 

Today's determination by the NLRB general counsel, Wissinger added, "goes a long way in moving the ball forward in getting McDonald's to be accountable for paying a decent wage."

"We've been hearing from these workers for two years about the conditions, and now you have a decision validating what they've been saying," he continued. "I certainly think it would hearten many people."

Heather Smedstad, senior vice president of human resources at McDonald’s USA, said the company will contest today's decision. Smedstad provided the following statement to Progress Illinois:

McDonald’s serves its 3,000 independent franchisees’ interests by protecting and promoting the McDonald’s brand and by providing access to resources related to food quality, customer service, and restaurant management, among other things, that help them run successful businesses. This relationship does not establish a joint employer relationship under the law.

This decision to allow unfair labor practice complaints to allege that McDonald’s is a joint employer with its franchisees is wrong. McDonald’s will contest this allegation in the appropriate forum.

McDonald’s also believes that this decision changes the rules for thousands of small businesses, and goes against decades of established law regarding the franchise model in the United States. McDonald’s, as well as every other company involved in franchising, relies on these existing rules to run successful businesses as part of a system that every day creates significant employment, entrepreneurial and economic opportunities across the country.

McDonald’s does not direct or co-determine the hiring, termination, wages, hours, or any other essential terms and conditions of employment of our franchisees’ employees – which are the well-established criteria governing the definition of a 'joint employer.'

McDonald's claims it does not influence how much workers get paid at its franchised restaurants, "but it effectively controls workers’ pay, hours and schedules by controlling every other variable in the business except wages," said Catherine Ruckelshaus, general counsel of the National Employment Law Project.

"Technological advances allow McDonald’s to watch over its franchisees’ operations like a hawk, in ways that go well beyond simply protecting its brand," she added. "The NLRB general counsel determination leaves no doubt that McDonald’s is an employer and puts an end to its self-serving charade that it is not.”

After McDonald's contests today's ruling, there will be a hearing before an administrative law judge and both sides will present their evidence, Wissinger said. 

Fells was asked whether workers would seek a union election, with McDonald's as the employer, if an administrative law judge determines after the hearing that the company can be treated as a joint employer in the labor cases. In response, he said the campaign is not at a "point where we can decide if we want to have card check elections or we want to have NLRB elections." 

"We're not convinced that we want to have elections at these stores, we're not convinced we want to do a card check," he said. "This campaign is about highlighting the workers who work in these stores and the conditions they work under ... What we're talking about is industry coming to the table and having a conversation about how these workers will get $15 an hour and a union" voluntarily recognized by fast food corporations.

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