McDonald’s corp., not just franchisees, on hook for labor violations

Low-wage fast food workers have won a significant legal triumph in their push for higher pay and better working conditions. The National Labor Relations Board (NLRB), the federal agency responsible for protecting the rights of private employees, employers and unions with regard to bargaining and collective action, has declared that the McDonald’s corporation — not just individual franchisees — could be on the hook for violating workers’ rights.

Since November 2012, as part of protests and strikes coordinated by the union-backed Fast Food Forward movement, McDonald’s employees have filed 181 complaints alleging retaliation and other unlawful conduct under the National Labor Relations Act.

In a statement issued Tuesday, the NLRB wrote: “In the 43 cases where a complaint has been authorized, McDonald’s franchisees and/or McDonald’s, USA, LLC will be named as a respondent if parties are unable to reach settlement.” It added that 64 of the complaints are pending investigation and 68 were found to lack merit.

McDonald’s, supported by restaurant industry groups and other employer-rights organizations, has vowed to fight the NLRB decision. “This is such a radical departure that it should be a concern to business men and women across the country,” Heather Smedstad, senior vice president of human resources for McDonald’s USA, told The Associated Press in a phone interview. The U.S. operation made $4.9 billion in profit in 2013.

Unions and worker advocates see the ruling as a coup, given that most of McDonald’s 14,000-plus restaurants are owned and operated by franchisees. In a group of lawsuits filed against the chain in March, employees alleged that the corporation tightly controlled the pay, food-delivery and record-keeping practices of individual restaurants. One franchise owner settled for $500,000 over unpaid laundry allowances, uncompensated work time and unlawful wage deductions.

Employee complaints against McDonald’s headquarters are part of a broader call for corporate accountability — an attempt to hold every genuine employer responsible for violations of the law. In New York, employees of the Domino’s pizza chain have fought to establish “joint-employer” status between the corporation and its franchisees. In California, the Teamsters union has filed complaints and pursued legislative relief to hold companies, not just their subcontracted “temp agencies,” liable for retaliation, wage violations and discrimination. The NLRB will soon rule on an appeal in one such case against a San Francisco Bay Area recycling plant.

“Some business-to-business relationships are much more arm’s-length and there are true independent businesses, but here it’s been shown that McDonald’s and its franchisees have a close relationship and that McDonald’s does exert significant control,” said Catherine K. Ruckelshaus, general counsel and program director at the National Employment Law Project.

The NLRB decision, Ruckelshaus said, “will help to ensure that our labor and employment laws respond to how businesses are operating and structuring themselves, and their effect on workers."