NLRB: McDonald’s Joint Employer of Franchise Employees
In another turn of the screw of a saga that has inflamed all corners of the franchise industry, the National Labor Relations Board (NLRB) Office of the General Counsel on December 19 cemented its plan to hold McDonald’s liable as a “joint employer” by issuing unfair labor practice complaints in 43 cases against McDonald’s franchisees and their franchisor, McDonald’s USA, LLC.
The widely reported complaints hold McDonald’s as a “joint employer” that is responsible for the workers at its franchised locations, and has been widely viewed as a victory for unions looking to hold the McDonald’s corporation liable for labor practices at individual locations.
In response to the NLRB’s actions, McDonald’s said the ruling strikes “at the heart of the franchise system—a system that creates economic opportunity, jobs and income for thousands of business owners and their employees across the country.
“McDonald’s is disappointed with the board’s decision to overreach and move forward with these charges, and will contest the joint employer allegation as well as the unfair labor practice charges in the proper forums,” the company said.
Alleging that McDonald’s USA, LLC and certain franchisees violated the rights of employees working at McDonald’s restaurants across the country—including those participating in nationwide fast food worker protests—the NLRB announced that it found merit in 86 cases filed since November 2012.
According to the NLRB statement, “the Office of the General Counsel have been in engaged in efforts to settle the matter with the parties” and that, thus far, “those efforts have largely been unsuccessful.”
The General Counsel will continue efforts to settle the charges. Additionally, of the 291 charges filed, 11 were resolved and 71 remain under investigation.
Related to charges against McDonald’s and some of its franchise locations, the NLRB found merit in claims of “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.”
In a conference call held the same day as the NLRB announcement, officials from the International Franchise Association (IFA), National Restaurant Association, National Retail Federation and U.S. Chamber of Commerce reacted to the NLRB McDonald’s complaints.
Robert Cresanti, executive five president, government relations & public policy at IFA, said this action is damaging to franchisees, as they are typically entrepreneurs drawn to the ability to operate independently.
“From a franchisor’s perspective, there’s an effective nailing of the door shut behind them, because it creates this uncertainty, it creates a question of who owns responsibility for the employees and who can most effectively affect their daily lives,” he said. “Our companies are not equipped to handle a scale of human resources … so it leaves the franchisee in a quandary of who’s actually in control and what new labor responsibilities they may have.”
Glenn Spencer, vice president, workforce freedom initiative at the U.S. Chamber of Commerce said “what the general council has now done is injected this huge amount of uncertainty into the equation.”
He added that, without knowing exactly what the NLRB’s standard is, it blurs a “very well defined, bright line” between franchises and joint employers.
“Because these are case-specific investigations, every single one of these is going to have to be investigated for some period of time, and people aren’t going to know how they should set up and run their businesses.”
When asked what the next steps will be for the group, Cresanti said the IFA is talking with player on Capitol Hill and considering the full range of legal options at its disposal.
“We’re going to be looking at potential Constitutional issues that are involved in this decision, and once we get more details, we’ll react as they come to light,” he said. “Essentially, from IFA’s perspective, nothing is off the table at this point.”