A labor dispute between McDonald's and its franchisees has been lodged before the National Labor Relations Board.
McDonald's expected to defend itself against federal labor officials in a case that could overturn the franchise model by redefining decades of employment law.
At issue was whether Illinois-based McDonald's is a "joint employer" of workers at its independently owned franchises, as per the National Labor Relations Board (NLRB). That would make the company liable for any labor law violations by the franchisees, which operate 90% of McDonald's U.S. restaurants.
In such case, employees argued that McDonald's is responsible for the workplace policies enforced by franchisees. The NLRB could make McDonald's responsible for any potential labor violations incurred by the franchisees with which it contracts. The case could also make it easier for unions to collectively bargain on behalf of all McDonald's workers.
In a report from Fortune magazine, lawyers for the general counsel of the NLRB made the case that McDonald's headquarters controls the working lives of cooks and cashiers who work in its franchised locations - and therefore should be considered a "joint employer," equally responsible for how they were allegedly treated.
Jamie Rucker, the lead lawyer for NLRB's general counsel, said, "The joint employer concept is not novel. It is also not narrow."
He was supported by benches full of attorneys for the agency and outside firms retained by the Service Employees International Union, which assisted in filing the hundreds of claims on behalf of protesting workers who claim they were illegally retaliated against, according to Reuters.
Calling it a "trial by ambush," McDonald's attorney Willis Goldsmith said it was the first time he was hearing the facts that the NLRB 's general counsel planned to present as evidence that McDonald's is a joint employer.
"This general counsel believes that franchising is a bad business model," said Goldsmith. "Mainly he believes it's a bad business model for union organizing. He believes that unions would be better off if franchisers were joint employers with their franchisees."
Goldsmith also argued that everything McDonald's does to improve its franchisees' performance is essential to maintaining the brand, which a franchiser is allowed to do without becoming a joint employer. Furthermore, he responded that even if the "operations consultants" sometimes directed franchisees rather than made suggestions, they were only isolated cases.
While labor groups considered this as a major boon for workers' rights, the NLRB's case is the latest example of a federal agenda aligned against small businesses that would "have dire consequences to franchisees, franchise employees, and the economy as a whole."
National Restaurant Association, an advocacy group for foodservice industry interests, argued that the decision could affect not only McDonald's, but other similar companies where franchisees hire employees on the company's behalf. Thus, giant fast food companies across the country could suddenly be forced to take responsibility for working conditions at all of their locations, not just the ones that fall under their corporate umbrellas.
Labor organizers have long argued that corporate practices, including collecting sales and labor data from franchisees, while setting prices indirectly controlled labor standards.
