Why the McDonald’s labor decision is important for workers in the US

Last month, the general counsel for the National Labor Relations Board (NLRB), which settles labor disputes in the U.S., decided for the first time that when considering labor complaints at McDonald’s franchises, it would deem the chain jointly responsible. A variety of observers have noted how this is an important breakthrough for fast food workers — one that prevents the multinational corporation from palming off labor abuses on bad-apple franchisees. But the implications are much wider than that. 

A globalized economy has changed the nature of employment in the modern economy, and it has created ambiguity about who is responsible for labor conditions in a given workplace. Today a huge number of people — whether entry-level office temps or more highly paid software developers, real estate managers and accountants — work in jobs that are temporary, freelance or outsourced.

Like fast-food workers at a franchised chain, they are likely to encounter situations in which their direct employer is a subcontractor or intermediary agency. While these intermediaries may take marching orders from the bigger fish that are their clients, the larger corporations deny any accountability for front-line employees’ working conditions.

Our labor laws have yet to catch up to this new reality. Yet employees’ ability to form collective organizations, protect their rights and create fair working standards is directly connected to how we resolve this issue.

The issue of employer of record — finding out which boss to hold accountable when there are multiple employers — might seem like a wonky concern. But it is central in determining whether working people are able to organize in our new economy. If we are ever to bring legal protections in line with today’s economy, expanding on the McDonald’s decision and rejecting corporations’ efforts to evade responsibility for labor abuses must be a first step.

Set during the Great Depression, the foundations of U.S. labor law are built on an older, industrial economy. The National Labor Relations Act of 1935, which gave employees the right to form unions and act collectively to negotiate wages and working conditions, was based on the idea that people would show up and work side by side for years in the same factory or office building. There was rarely a question about whom these employees should negotiate with.

That is no longer the case. As of 2006, nearly 1 in 3 Americans was part of the contingent workforce. They might work from home or take on contracts a few months at a time. They are consultants, freelancers or day laborers, with multiple clients and no clear employer. Today, employees working for the same company might be spread out in offices across the country or even around the globe. Conversely, one person in an office might be an employee of a contractor different from a coworker’s in the next cubicle, creating the potential for significant confusion in the eyes of the law.

These changes have allowed for an epidemic of exploitation.

The fact that our government has not caught up to the altered nature of relationships between working people and their employers has allowed corporations to deny responsibility for the labor conditions in the factories and offices that produce the bulk of the goods they sell and services they provide. Large corporations have constructed their business models around the ambiguity in the law — using sometimes elaborate supply chains and subcontracting structures to avoid responsibility.

The problem affects working people up and down the employment ladder, from minimum wage workers to providers of high-end business services.

The most dramatic examples of abuse in supply-chain subcontracts have been raised by anti-sweatshop campaigners targeting companies such as Nike, Disney and Apple. These watchdogs have documented how, in awarding contracts, large corporations whipsaw small-business owners against one another to drive down costs while demanding exacting standards from subcontractors. Despite their clear control of the industry, these corporations deny any responsibility for sweatshop conditions in the factories that produce their wares.

Domestically, arrangements such as franchising — the form prevalent in the fast-food industry and targeted by the NLRB — have allowed for a similar denial of responsibility. The franchises may be independently owned, but management decisions such as staffing levels, shift scheduling and even wages are influenced by the corporation, which sometimes leaves owners just as exploited as the workers beneath them. By refusing to be considered the boss despite exercising control, the fast food industry has made a mockery of federal protections for U.S. workers.

Higher-paid workers have faced problems of their own resulting from new employment arrangements. Many employees who would once have worked in house for a business are now treated as independent contractors or receive their paychecks from intermediary firms. In this context, delayed or unpaid invoices become a form of wage theft. Even if such problems affect a large segment of a workforce, increasingly isolated and autonomous employees are hard pressed to come together with co-workers to address injustices.

Updating our labor laws will require addressing the issue of employer of record and creating clear lines of responsibility in the changing U.S. workplace. Activists have long known this. That’s why today a predominant strategy for improving working conditions is to avoid the NLRB altogether and instead put pressure on brand names and the CEOs behind them.

There are many examples of this type of grass-roots campaigning — from anti-sweatshop groups pressuring Walmart to the Coalition of Immokalee Workers in Florida demanding that Taco Bell improve conditions at its suppliers.

In a pioneering example from the early 1990s, the Service Employees International Union’s Justice for Janitors campaign in Los Angeles targeted the corporations where janitors actually worked rather than the dozens of subcontracted building-services businesses that hired and dispatched the staff. By ignoring the legal barriers, organizing community pressure and engaging in massive civil disobedience, the union was able to organize the janitorial industry and dramatically raise wages for building-services workers across the city.

As a next step, labor law needs to catch up to conditions that working people in the U.S. have put up with for decades. The decision by the general counsel of the NLRB to hold McDonald’s accountable and to expand protections to its employees is a promising first step in cutting through the cobwebs that have accumulated in our 80-year-old legal system for protecting workers’ rights. But until we go much further, our labor law will be stranded in the industrial age — and our country’s employees left to navigate the new economy’s uncertain waters by themselves.