The National Labor Relations Board (NLRB) ruled on Tuesday that McDonald’s Corp. could be held jointly liable for labor and wage violations by its franchise operations. This decision, if upheld, is pivotal because it would disrupt longtime practices in the fast-food industry and could possibly pave the way for unionizing in the industry.
The ruling comes after the labor board investigated myriad complaints that workers in the fast-food industry brought in the last year and a half accusing McDonald’s and its franchisees of unfair labor practices. Richard F. Griffin, Jr., the labor board’s general counsel, said 181 cases involving McDonald’s have been filed since 2012. For the 43 cases that were found to have merit, the board said McDonald’s or its franchisees will be named as respondents if the parties fail to reach a settlement.
In those cases, Griffin said he would include McDonalds as a joint employer, a classification that could potentially hold the company responsible for actions taken at thousands of its restaurants. In the United States, the vast majority of McDonald’s more than 14,000 restaurants are owned and operated by franchisees. “This is such a radical departure that it should be a concern to business men and women across the country,” said Heather Smedstad, senior vice president of human resources for McDonald’s USA. McDonald’s said it would contest the decision by the NLRB.
Fast-food workers who filed cases asserted that McDonald’s was a joint employer on the grounds that it orders it franchise owners to strictly follow its rules on food, cleanliness, and employment practices as well as use menus, supplies, uniforms, and training materials supplied by the corporation.
The NLRB action comes amid protests for higher pay that have captured national attention, with labor groups calling for chains to adopt a $15 wage floor and allow the right to unionize. Throughout that debate, McDonald’s and other fast-food chains have said that they do not set employee wages but that the franchise owners do. The NLRB decision, if it stands, would weaken that defense considerably.
The next phase will unfold before administrative law judges hearing the employees claims. If the judges rule against McDonalds’s on the joint-employer finding and the labor violations claims, the company is likely to appeal to the full-five member labor board in Washington, D.C. Given that McDonald’s is arguing that the legal counsel’s ruling goes against three decades of law, the case could ultimately wind up before the Supreme Court.