McDonalds Loses Ability To Shield Itself From Worker Lawsuits

Labor unions in Europe and Brazil are asking their governments to help put a stop to McDonald’s alleged hamburgling of worker wages and government tax revenues. CREDIT: FLICKR USER SORTOFBREAKIT
Labor unions in Europe and Brazil are asking their governments to help put a stop to McDonald’s alleged hamburgling of worker wages and government tax revenues. CREDIT: FLICKR USER SORTOFBREAKIT

In a ruling that raises the stakes for numerous fast food worker efforts, the National Labor Relations Board’s (NLRB) top lawyer said on Tuesday that McDonald’s Corp. is responsible for the actions of the owner-operator franchisees who run the vast majority of its stores.

The arrangements McDonald’s makes with its franchisees have long been understood to insulate the corporation from worker lawsuits. Because the buck stopped with individual owner-managers rather than with at the company’s Illinois headquarters, worker lawsuits and unionization efforts were limited in scope and unable to seek remedies from the company’s $5.6 billion in annual corporate profits.

Workers have repeatedly challenged that interpretation of the franchisee relationships, most recently in a slew of class-action wage theft lawsuits this spring. Those cases centered on a computer system installed by McDonald’s at franchisee stores that compares labor costs to money coming in in real-time, encouraging managers to fiddle with workers hours and timesheets as necessary to keep that expenses ratio as low as possible at all times.

The suits named both franchisees and McDonald’s itself, and workers and attorneys were optimistic that the legal challenges would poke holes in the company’s claims to legal indemnity. Tuesday’s ruling did just that, though it stemmed from separate, older claims involving workers who had attempted to unionize and were fired in retaliation.

“McDonald’s has tried to avoid the obligations associated with employing the vast majority of the people who prepare and serve their food,” worker attorney Micah Wissinger said on an afternoon press call, “but the reality is they require franchisees to adhere to strict rules.” Wissinger, whose clients brought the initial lawsuits over alleged retaliatory firings at New York City stores in 2012, explained that the decision does not make it any more or less likely that the labor board will find merit in any of the 113 individual allegations of which he is aware. But in cases where regional NLRB officials do find complaints have merit, “they are to name McDonald’s as an employer” in their rulings. An NLRB spokesperson confirmed the decision to ThinkProgress.

McDonald’s told the Associated Press that it had been notified of the general counsel’s ruling earlier Tuesday afternoon. Senior vice president of human resources Heather Smedstad told the wire service that Tuesday’s ruling “is such a radical departure that it should be a concern to business men and women across the country.”

Cathy Ruckelshaus of the National Employment Law Project disputed that assessment of the ruling on Tuesday’s press call. “Holding McDonald’s accountable will not portend the death of franchising as many argue,” Ruckelshaus said. “All it means is that corporations that exercise control over their workers cannot feign ignorance” of those workers’ rights and complaints.

A man named Richard who has worked in the same Kansas City McDonald’s for 18 years agreed that franchisees will be better able to care for employees’ well-being if the corporation is held accountable for wages and working conditions. “Some may think that who my boss is is just a technicality, but it matters,” Richard said on Tuesday’s call, because in order to adhere to the rules of their franchising contracts “the only thing franchisees can skimp on is wages.”

“They would pay more if they could, I’m sure of it,” he said, “but they’re hamstrung. This will help us hold McDonald’s accountable for wage theft and other violations, and make it easier to form a union.”

The fast food worker campaign for a $15 wage and the ability to unionize began with strikes in New York City in late 2012 and has spread to more than 150 U.S. cities and dozens of other countries as of this spring. No matter how hard McDonald’s and other chains with similar business models fight before judges and NLRB panels, the workers are prepared to intensify their efforts. At a convention last weekend, over a thousand worker attendees voted to add civil disobedience to the list of tools they will use to press for changes in an industry where CEOs earn 1,200 times what frontline workers do and grown-ups with families work full-time but still cannot escape poverty.