Dive Brief:
- The House Committee on Education and Labor subpoenaed the National Labor Relations Board on Tuesday for alleged ethical violations involving a December ruling that found McDonald's not liable for violations committed by franchisees, resulting in a roughly $170,000 settlement from the chain's franchisees to employees. Fight for $15 and other labor groups accused the chain of firing workers for engaging in union activity in 2012.
- NLRB board member William Emanuel was asked not to participate in the case since he worked for a law firm that helped McDonald's franchisees looking for legal assistance in response to employee protests. But Emanuel was involved in the process, which House Education Committee spokesperson Josh Weisz told The Washington Post violated an executive order that bars board members to be involved in decisions "directly and substantially related" to former employers or clients.
- The House Committee on Education and Labor is also investigating Emanuel's participation in the NLRB's decision to clarify the joint employer rule in February. The updated terms of the rule insulate franchisors from being held liable for labor infractions committed by their operators.
Dive Insight:
The subpoena follows more than a year of attempts by the House committee to obtain ethics-related documentation from the NLRB, and the committee claims that the board has refused to share this documentation and that this behavior "indicate[s] that the NLRB has something to hide regarding decisions that are likely tainted by a defective process, such as the McDonald's case and the joint employer rulemaking," according to a Sept. 1 letter.
The NLRB argues that the committee isn't entitled to these documents, calling the situation "unprecedented" and a "made-up controversy," according to The Washington Post. The NLRB has allowed the committee to view some documents privately, but has not formally submitted the materials, and NLRB spokesperson Edwin W. Egee claims "protocols were not violated in either the Joint Employer Rulemaking or McDonald's."
If the McDonald's ruling and the updated joint employer definition processes are found to be unethical, it could mark a major shift in franchisor-franchisee relationships among major restaurant brands, and be a victory for labor groups.
This will be a particularly unwelcome turn of events for McDonald's, whose U.S. footprint is made up of 95% franchisees. The chain has also repeatedly been in the spotlight because of patterns of sexual abuse, workplace violence and workplace retaliation at the store-level. The NLRB's December ruling and subsequent definition change ensured that the Golden Arches would not have to answer for the issues of its operators, a new reality that would save the chain money and allow it to distance its brand image from any violations at individual franchisee-run restaurants.
Now, that financial security and extra padding around its brand halo could hang in the balance. It's just the latest in a series of blows to the mega chain's reputation. McDonald's is currently fighting an ugly clawback battle with ousted ex-CEO Steve Easterbrook, who was fired for having an inappropriate relationship with an employee but later found to allegedly have nude images of female employees in his work email and evidence of three additional sexual relationships with female subordinates.
McDonald's feels it was deceived by Easterbrook and wants to recoup his severance package, but executives and former managers have since reported that Easterbrook covered up misconduct by other employees and that HR ignored complaints about leadership's behavior. The company's board is now teaming with outside counsel to examine its HR department's operations.
In short, attempting to distance itself from the malpractice of franchisees is fruitless if unhealthy company culture is stemming from the restaurant's core. Still, if the NLRB's processes on theses two rulings is found to be unethical, McDonald's could inherit a lot more behavioral violations it would need to answer for.
