McDonald’s Fights ‘Joint-Employer’ Label by NLRB
Chicago — McDonald’s tells its franchisees how to staff restaurants, when to clean the bathrooms and where partially completed orders should be placed on counters, an attorney for the National Labor Relations Board said Thursday.
That operational nitty-gritty, along with the business consultants, scheduling systems and hiring software provided to franchisees shows the Chicago-area company calls the shots and is ultimately responsible for workers’ conditions, they said.
Details of McDonald’s relationship with franchisees began to emerge during opening statements in a hearing to determine whether McDonald’s is jointly liable for labor law violations involving employees at franchised restaurants.
The fast-food chain fiercely disputes the joint-employer designation and says it could undermine more than 60 years of franchising tradition.
Addressing Administrative Law Judge Lauren Esposito in New York, Jamie Rucker, an attorney for the general counsel of the NLRB, gave an example of a McDonald’s operations consultant who warned a franchisee to bring his workers’ wages down because “it could be disruptive” to neighboring McDonald’s restaurants.
McDonald’s “is at the center of labor relations, and labor relations are conducted by employers, not by bystanders,” Rucker said.
Calling it a “trial by ambush,” McDonald’s attorney Willis Goldsmith said it was the first time he was hearing the facts that the NLRB’s general counsel planned to present as evidence that McDonald’s is a joint employer.
The NLRB’s general counsel in 2014 ruled that McDonald’s could be held jointly liable with franchise operators who were accused of firing, threatening or penalizing workers who participated in nationwide strikes demanding a $15-an-hour minimum wage. The agency then issued a consolidated complaint against McDonald’s and about 30 franchisees in six cities, including Chicago, alleging unfair labor practices.
Until now, McDonald’s business model has allowed it to distance itself from the working conditions of the people who work at its franchised locations. About 90 percent of McDonald’s restaurants are run by franchisees, who the company has long maintained are independent owner-operators who set their own wages, hiring and firing policies while adhering to some standards to maintain the integrity of the brand.
A finding that McDonald’s is a joint employer could pave the way for unions to organize its employees systemwide and force the corporation to the bargaining table amid a highly publicized fight for higher wages.
McDonald’s is the largest franchisor in the world, with 3,900 small- to mid-size businesses running close to 13,000 restaurants, Goldsmith said.
“Under every legal standard, McDonald’s has never been held to be a joint employer of its franchisees’ employees,” Goldsmith said. “Never has been and has no desire to be.”
Goldsmith said McDonald’s sets expectations and provides advice for how franchisees can meet those expectations, such as through sample personnel policies, to ensure brand consistency.
But he said implementation is optional.
It is possible that a few “stray emails” could show an operations consultant crossing the line between offering advice and giving direction, Goldsmith said, but argued that would be “individualized evidence” that doesn’t show corporate control.
He also addressed allegations that McDonald’s coordinated a national response to the union-backed Fight for $15 protests that sparked the retaliation claims leading to the complaint.
Goldsmith called the wage campaign an “ongoing, frontal attack” on the brand, and said that “to suggest that those independent entities can’t communicate with each other or with their franchisor has no basis in the law or in logic.”
Lawyers for several of the franchisees named in the complaint also gave opening statements that disputed the notion that McDonald’s exerts control over workers’ employment terms and conditions.
Giving varied examples of how franchisees run their restaurants and responded to the protests, they said their clients are small business owners who don’t consult the company before hiring or firing employees or setting pay.
For example, the scheduling software that McDonald’s offers doesn’t know road construction, weather or employee performance, so franchise owners deviate from it on a daily basis, said Roger Crawford, an attorney representing franchisees in California.
Calling the case “a colossal waste of time and resources,” Crawford said the unfair labor practice complaints against his clients could have been resolved in a much shorter time than the years the McDonald’s case is expected to take because of the joint employer designation.
Witness testimony will begin Monday on the joint employer question. After New York, the case moves to Chicago and Los Angeles before returning to New York to address the unfair labor practice complaints in stores in those regions.