Economy

This Country Could Make Sure McDonald’s Actually Follows The Law

CREDIT: AP

Protestors burn a mocked-up U.S. flag outside a McDonald's in the Brazilian capital of Brasilia in 2005

Brazil’s Senate will hold public hearings on worker allegations that McDonald’s has flouted the country’s strict labor protections for decades, union officials announced on Thursday.

When politicians solicit worker testimony at the August hearing, they will create a second forum within the Brazilian government for a slate of allegations that echo accusations in the United States. The corporate conduct that unions are alleging in Brazil very closely resembles the claims workers and their representatives have made against American locations in multiple court cases. But these twinned sets of wage theft and scheduling complaints will play out in a very different way in the two countries, thanks to important differences in the structure and nature of labor law in Brazil and the U.S.

Unions are accusing Arcos Dorados Holdings, the largest single McDonald’s franchisee on the planet, of systematically denying Brazilian employees of proper pay, failing to ensure their workplaces are safe and dignified, ignoring laws that restrict employer scheduling practices that interfere with workers’ family lives, and refusing to pay mandatory unemployment insurance and retirement savings benefits.

Arcos Dorados is a multi-billion-dollar company that operates McDonald’s franchises throughout Latin America. It controls roughly one out of every 16 McDonald’s locations on earth. When the company went public in 2011, CEO Woods Staton became a billionaire overnight.

Educated in Atlanta and Switzerland, Staton seems to have absorbed many of the same worker-squeezing business practices that the company relies upon in American stores. Striking workers in the U.S. tell of McDonald’s managers who manipulated their time sheets so that they did not get paid for hours they worked, or ordered employees to clock out but keep working. Such wage theft claims are central to the pair of Brazilian lawsuits that have gained the national Senate’s attention.

American businesses have also reportedly begun relying on so-called “clopening” shifts, where employers eager to grind every penny of savings they can out of their workforce create schedules that make it almost impossible for a person to sleep adequately or spend time with their family before returning to work. Such schedules are inhumane anywhere, but in Brazil they’re illegal – and Arcos Dorados is accused of knowingly implementing illegal schedules anyway.

One Brazilian labor ministry official believes Arcos Dorados is directly importing those scheduling practices from their American overlord. “Arcos Dorados wanted to implement the same working patterns that McDonald’s uses in the US or the UK,” labor official Leonardo Mendonca told The Guardian. “But that is not permitted under Brazilian law. Workers also have families and they should not always have to be at the dispensation of their companies.”

It should come as no surprise that a much-criticized employer cost-cutting measure in the U.S. is a flat-out crime in Brazil. The country’s reputation for having the most advanced worker protection laws in the world is well deserved, according to senior federal judge Peter Messitte. “Brazil really does have, at least on the books, fairly advanced labor laws that are protective of the worker,” Messitte, who runs the Brazil-U.S. Legal and Judicial Studies Program at American University’s law school, told ThinkProgress.

On the surface, the differences aren’t profound. Like the U.S., Brazil requires a minimum wage, mandatory break time, additional pay for overtime, and employer contributions to unemployment and retirement systems. Workplace codes are more extensive than in America, to be sure. But the real differences emerge on a structural level. It’s less about what rights workers have than about how they can insist upon them.

“The most significant difference between worker protections in the U.S. and Brazil is that they are more extensive, more uniform, and probably easier to vindicate [there] than in the various U.S. states,” said Messitte, whose interest in Brazil’s legal system began when he worked there with the Peace Corps in the 1960s. “All law that really matters in Brazil is national in scope, so everybody operates under the same law. You don’t have one set of federal laws and 50 different state laws like we do here.”

The system workers and unions use to adjudicate disputes involving that uniform, national workplace law system in Brazil is also different in important ways. “You’ve got a separate system of labor courts, you’ve got judges of labor, there are regional labor courts, and then there’s a superior labor court, like a labor supreme court. So you’ve got all of these different courts that exist really just to vindicate labor rights,” Messitte said.

If a dispute involves workers and employers, it goes into the labor court system regardless of the specific nature of the conflict. The U.S. has no such unitary system of dedicated judges and courtroom staffs. The same American might have to take a wage theft dispute to one government body, a workman’s compensation issue to another, and a complaint about illegal anti-union activity by her boss to a third. “In Brazil, the court system would deal with all these issues,” Messitte said, but in the U.S. “we don’t have a court that deals with all that singly.”

The National Labor Relations Board (NLRB), which has been a key forum in McDonald’s worker activism in America in recent years, is not at all analogous to the Brazilian system. “Mostly the NLRB deals with unfair labor practices on a larger scale,” Messitte said. “But the individual complaints of an employee would go to a number of different organizations depending on what it is. There’s no court system where workers go to present their individual claims. The NLRB doesn’t do it. We have a very fragmented system of labor law.”

These contrasts also extend to the penalty phase of labor disputes. The NLRB has significant power to alter how bosses and corporations behave, but punitive actions and dollar settlements are generally left to the courts or other government agencies. If Brazil’s labor courts find in favor of McDonald’s workers, however, they could impose fines as high as an eye-popping 30 percent of the company’s sales revenue and prohibit Arcos Dorados from opening new locations in the country until it proves it has come into compliance with workplace laws.

Regardless of what the labor judges decide, the court of public opinion may ultimately be a more important venue for McDonald’s, Messitte said, despite the latter’s ability to hit the brand’s biggest franchise partner with a potentially deadly fine.

“There’s more at stake here than any individual claimant. There’s a certain amount of theater, and there’s a certain amount of public interest in it,” Messitte said. “McDonald’s is in some ways America to a lot of people around the world.”