By Melanie Trottman and Julie Jargon
The National Labor Relations Board has issued complaints naming
McDonald's Corp. as a "joint employer" of workers at its
franchisees, a win for unions in their effort to get the agency to
hold franchisers liable for labor violations by store owners.
The complaints, issued Friday by the NLRB's general counsel's
office, allege McDonald's and certain franchisees violated rights
of restaurant workers by making statements and taking actions
against them for participating in nationwide protests and other
activities to improve their wages and working conditions over the
past two years.
The complaints stem from 291 charges filed with regional offices
of the NLRB since November 2012. After finding merit in some of the
charges, the NLRB's general counsel's office in July issued its
opinion that the company should be considered a "joint employer" in
the matters. The office warned then that it would issue the
complaints if there was no settlement reached first.
Of the 291 charges, 86 have been found to have merit and 71
remain under investigation. About 10 of the charges with merit
solely involve corporate-owned McDonald's restaurants--not
franchisees. In total, the agency is issuing 13 consolidated
complaints that cover 13 NLRB regions.
The NLRB said its investigation found that McDonald's, through
its franchise relationship and its use of tools, resources and
technology, "engages in sufficient control over its franchisees'
operations, beyond protection of the brand, to make it a putative
joint employer with its franchisees, sharing liability for
violations" of labor law the agency enforces.
McDonald's has said its franchisees--who own 90% of the
company's more than 14,000 U.S. restaurants--set wages and control
working conditions within their restaurants.
It said in a statement Friday that it helps franchisees in part
by providing access to resources related to food quality, customer
service, and restaurant management. "These optional resources help
entrepreneurs operate successful businesses. This relationship does
not establish a joint employer relationship under the law--and
decades of case law support that principle," McDonald's said.
The complaints, McDonald's said, "improperly and dramatically
strike at the heart of the franchise system," and represent
"overreach" by the agency. McDonald's "will contest the joint
employer allegation as well as the unfair labor practice charges in
the proper forums," the company said. It also said owners of its
restaurants have informed the company that they too will contest
the charges.
Linda Dunham, a franchisee who owns seven McDonald's in New York
and New Jersey, including one New York restaurant that was named in
one of the complaints issued Friday, said the NLRB has been
investigating the charges against that location for a while. She
said she couldn't discuss the specifics of the allegations but said
defending her business has been financially and emotionally
devastating. "It's taken the focus off what we do every day," said
Ms. Dunham, who said she opposes McDonald's being treated as a
joint employer in her case because "I work for myself, not for
McDonald's."
Several trade groups held a rare joint conference call Friday
for media to voice their opposition to the complaints. The groups,
including the U.S. Chamber of Commerce and the International
Franchise Association, said allowing companies to be treated as
joint employers with their franchisees would undermine the
efficiencies of contracting and make companies liable for the labor
actions of their franchise partners. They also said it would make
their members more vulnerable to campaigns by union-backed groups
for higher wages and other improvements in working conditions for
restaurant and retail workers, the trade groups said.
Fast Food Forward, a group backed by the Service Employees
International Union, has been organizing demonstrations at
McDonald's and other fast-food restaurants for two years, including
one-day strikes in which fast-food workers have called for a $15
hourly minimum wage and the right to form a union without
intimidation from their employers.
The group and unions say a change in joint-employer regulation
is needed to address arrangements in which one company exercises
control over wages and working conditions at another but has little
responsibility for the workers.
Write to Melanie Trottman at melanie.trottman@wsj.com and Julie
Jargon at julie.jargon@wsj.com
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