On March 20, McDonald's USA and its franchisees asked Administrative Law Judge Lauren Esposito to approve proposed settlement agreements negotiated for the General Counsel of the National Labor Relations Board.

The crux of the case is a battle over the parameters of “joint employer” status and whether the McDonald’s parent company is responsible for workplace violations caused by its franchisees.

McDonald’s asked Esposito to approve agreements intended to provide 100 percent of backpay for affected employees subject to unfair labor practice cases pending before Esposito. These settlements represent a full remedy for the employees who have waited since the first charges were filed in November of 2012. If approved, they would avoid years of possible additional litigation.

McDonald’s, in the proposal, agreed to certain steps to ensure that the settlement will be fully effectuated and honored by its franchisees, including the establishment of a settlement fund in the event of any breaches of the settlement agreements.

The McDonald's case, which involves allegations that the company unlawfully harassed and fired workers organizing for higher wages, has been in trial before an administrative law judge for two years and could affect the collective bargaining rights of millions of franchise workers across the country.

There has been recent confusion, however, regarding the status of the case.

In February, the NLRB issued an Order vacating the Board's “decision in Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co., 365 NLRB No. 156 (2017).”

The decision comes after NLRB's inspector general questioned the validity and standing of the Hy-Brand decision based on Emanuel's former employment with Littler Mendelson, a law firm involved with Leadpoint, a company connected to the original Browning-Ferris case.

In a 3-2 decision on Dec. 14, the National Labor Relations Board had overruled its 2015 decision related to Browning-Ferris Industries, which could make joint-employer rules less onerous and complex. For franchise operations, this could be a real shot in the arm.

The ruling covers every company that contracts out for services rendered by those who are not the company’s own employees. The headquarters of a fast food chain, for example, could be held liable for the unfair labor practices of an otherwise independent franchisee.

Under Hy-Brand, it became significantly less likely that the typical franchisor-franchisee relationship will result in being considered joint employers, as they would under the BFI standards.

Before it was vacated, the Hy-Brand decision had been the pretense for settlement discussions with McDonald's on the basis that the Hy-Brand decision wiped out some of the workers' claims against the corporation. In 2014, the NRLB fielded 13 complaints involving 78 charges against McDonald’s. The complaints alleged that the conduct by the “joint employers” violated the rights of employees. The NLRB alleged that McDonald’s USA and McDonald’s franchisees engaged in “discriminatory discipline, reductions in hours, discharges, and other coercive conduct directed at employees in response to union and protected concerted activity, including threats, surveillance, interrogations, promises of benefit, and overbroad restrictions on communicating with union representatives or with other employees about unions and the employees’ terms and conditions of employment.”

The complaints could have far-reaching effects for McDonald’s, and others that rely on a franchise model, in that the NLRB’s reversal opens the door to unionization and other organized worker demands for wage increases and improved working conditions.

Recently, Senators Elizabeth Warren (D-Mass.), Kamala Harris (D-Calif.), Kirsten Gillibrand (D-N.Y.), Cory Booker (D-N.J.) and Sherrod Brown (D-Ohio), wrote to Peter Robb, general counsel of the National Labor Relations Board, requesting that he allow the trial in the McDonald's joint-employer case to proceed so that a judge may rule on the fast food giant’s liability.

In their letter, the senators noted that because the Hy-Brand decision no longer stands, a decision to enter settlement discussions is entirely unwarranted. "Now that the Board has vacated Hy-Brand and returned to the 2015 joint employer standard, it is imperative that you swiftly resume and finish the trial and allow the ALJ to issue a decision in this critically important case," they wrote.

 

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