When labor disputes arise, fast-food giant McDonald’s can no longer insulate itself from those issues with a longstanding practice that places them in the purview of franchise owners. Authorizing complaints against franchisees, general counsel for the National Labor Relations Board has determined that the chain’s corporate parent will be considered a joint employer.
The decision could have far-reaching effects for McDonald’s, and others that rely on a franchise model, in that it opens the door to unionization and other organized worker demands for wage increases and improved working conditions.
In a statement this week, the NRLRB’s Office of the General Counsel said it had investigated charges alleging McDonald’s franchisees and their franchisor, McDonald’s, USA, violated the rights of employees. It has had 181 cases involving McDonald’s filed since November 2012. Of those cases, 68 were found to have no merit, 64 cases are currently pending investigation, and 43 cases were found to have merit. In the 43 cases where complaint has been authorized, McDonald’s franchisees and/or the franchisor will be named as a respondent if parties are unable to reach settlement.
“The NLRB recommendation would force McDonald's to change its highly successful relationship between franchisee and franchisor to a joint employer model is wrong headed and will have a negative impact on the growth of small businesses in America, a statement from the National Council of Chain Restaurants said in a response to the NRLB announcement.
The Service Employees International Union, with 2.1 million members, has spearheaded many of the complaints against McDonald’s. In May, union leaders and nearly 100 McDonald’s employees were arrested after protesting outside the company’s annual meeting.
"We came to McDonald's world headquarters because this is where the real decisions are made,” Mary Kay Henry, SEIU president said in a statement at the time. “It's time for the McDonald's corporation to stop hiding behind its franchisees and to stop pretending that it can't boost pay for the people who make and serve their food.”
Those protests tied to a national campaign, and stalled legislation, that would increase base pay for fast food industry workers to $15 an hour. McDonald's, in past statements, has strongly pushed back against charges that it is “anti-union.”
"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,” Heather Smedstad, the company’s senior vice president for Human Resources, said in a statement following the NRLB announcement. “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,” she added. “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 U.S. 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.”