Employment Law Report
NLRB Asserts McDonald’s Is a “Joint Employer” of Employees of Its Franchisees
The NLRB’s general counsel announced on December 19, 2014 that he will proceed with thirteen (13) cases involving seventy-eight (78) charges against McDonald’s USA, LLC and its franchisees. The alleged violations took place against McDonald’s workers in several cities throughout the country, including: Detroit, St. Louis, Manhattan, Philadelphia, Atlanta, Chicago, Kansas City, New Orleans, Los Angeles, Phoenix, San Francisco, Minneapolis and Indianapolis. McDonald’s and its franchisees allegedly retaliated illegally against employees who participated in union-related activities by reducing their hours, terminating them and/or subjecting them to other disciplinary actions.
By filing the cases against McDonald’s and its franchisees, the general counsel is asserting that McDonald’s can be liable as a “joint employer,” despite the fact that many of the alleged labor violations were committed by independent franchise owners. This has sweeping industry implications, striking at the very heart of the franchise system. Unions, of course, see the cases as a win, claiming that McDonald’s should be held liable for labor violations that are committed by independent franchise owners. According to the unions, McDonald’s requires its franchisees to adhere to several rules and regulations, such that there is no doubt that the franchisor is truly in charge. Franchisors, on the other hand, are aghast at the potential exposure to liability that could arise if the definition of “joint employer” is expanded in this matter. Parties on both sides of this debate are closely watching the situation.
The McDonald’s cases are set to proceed before administrative law judges beginning March 30, 2015. The losing party will be permitted to appeal the decision to the 5-member National Labor Relations Board in Washington, D.C. If ultimately deemed a “joint employer,” McDonald’s (and other franchisors) could be held liable for wage and workplace violations committed by any of their franchisees.