Legal Issues

In Federal Labor Disputes, McDonald's Just Became the Boss of Its Franchise Workers


In Federal Labor Disputes, McDonald's Just Became the Boss of Its Franchise Workers

Photograph by Tim Boyle/Bloomberg

The fast-food business model just suffered a blow. The top prosecutor for the federal labor board has rejected McDonald’s (MCD) claim that it’s not the boss of the workers in its franchised stores.

Within the past 21 months—the period in which strikes by fast-food workers went from unheard-of to increasingly common—union-backed McDonald’s workers have brought 181 charges before the National Labor Relations Board. On Tuesday the NLRB general counsel’s office announced it had found dozens of allegations with enough merit to pursue. And, more important, the general counsel directed NLRB officials to treat McDonald’s as a defendant alongside the franchisees running the stores. Giving McDonald’s shared responsibility for how franchisees treat workers could force corporate headquarters to get involved more closely with everything from potential unionization to wages.

Micah Wissinger, an attorney who represents McDonald’s workers in New York City, ticked off the reasons why the company should share responsibility with franchisees in the NLRB cases. McDonald’s uses “computer systems that measure and track every aspect of the store’s operations,” he said on a conference call Tuesday.

McDonald’s, of course, will vigorously contest such a conclusion. The NLRB action, the company said in a statement, threatens to “changes the rules for thousands of small businesses and goes against decades of established law regarding the franchise model in the United States.”

The five presidentially appointed members of the NLRB in Washington have already invited briefs on the question of who qualifies as a joint employer in a different case involving a recycling company. If they ultimately reach the same conclusion on McDonald’s as the general counsel did, and hold McDonald’s responsible for alleged lawbreaking at its franchised stores, you can expect McDonald’s to appeal the decision to federal court. And congressional Republicans can be expected to raise a furor, as they did when the NLRB investigated the aerospace giant Boeing (BA).

Having McDonald’s treated under law as a boss of the workers in its thousands of franchised stores poses a threat to the company on several fronts. First, it would raise at least the theoretical threat of workers at a store filing with the government for a unionization election—although that’s a route recent history suggests the Service Employees International Union, the key player behind the recent strike wave, would be extremely unlikely to pursue. Second, it would strengthen the case for treating McDonald’s as a co-defendant in pending cases alleging rampant wage theft.

And third, it’s a symbolic victory for organized labor’s efforts to convince the public that fast-food corporations are responsible for abuses in the industry, from poor pay to on-the-job injuries. That brings the SEIU closer to its still-distant goal: forcing so much pressure, humiliation, and disruption on the industry that the top corporations—not the individual franchisees—choose to negotiate over changes to their business model.

“At some point,” Fast Food Forward Organizing Director Kendall Fells told reporters, “McDonald’s and the industry as a whole will decide that it makes sense to sit at the table with these workers, because the workers have now changed the power dynamic between them and the actual corporations.”

Eidelson is a reporter for Bloomberg Businessweek in Washington.

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Companies Mentioned

  • MCD
    (McDonald's Corp)
    • $93.75 USD
    • 0.28
    • 0.3%
  • BA
    (Boeing Co/The)
    • $127.32 USD
    • 1.01
    • 0.79%
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