Dive Brief:
- In 2-1 ruling Thursday, the National Labor Relations Board absolved McDonald's as a joint employer from responsibility for labor violations brought forward in 2012 by Fight for $15 and other labor groups, according to a press release from NLRB.
- The ruling approved a roughly $170,000 settlement between McDonald's operators and their employees, Bloomberg Law reports. The groups claimed that McDonald's fired workers for engaging in union activity.
- This ruling suggests it's unlikely the agency will punish franchisers for the violations of their operators in the future, per Bloomberg Law.
Dive Insight:
McDonald's victory will likely protect other restaurants from paying for their operators' infractions as joint employers in the future — a win for chains and a serious blow to labor groups.
The 20 employees that filed charges against McDonald's in 2012 hoped to make the fast food giant liable for what they deemed as franchisee retaliation against employees looking to unionize. But McDonald's argued that it doesn't employ its workers directly since 95% of its U.S. system is owned and operated by franchisees.
This particular McDonald's battle had become a symbol of the American fast food worker's struggle for agency, and the ruling is now a case study that could inform future disputes — and have other major chains breathing a sigh of relief. Whether this ruling will discourage other fast food employees from filing labor suits against their companies is unclear. Still, in today's talent-strapped labor market, restaurants need to present as progressive and supportive of employee welfare in order to attract and retain workers. This is a battle McDonald's is currently losing.
McDonald's has had a recent slew of sexual harassment suits claiming the chain has "systemic" issues and ignored complaints from its workers. It was also sued in November by 17 employees for failing to address workplace violence at its restaurants.
In one of the larger cases this year, workers filed a suit claiming that a Bay Area franchiser violated overtime, meal and rest break requirements, and sued both the operator and McDonald's as joint employers. The employees argued that McDonald's computer system, which is used for time-keeping for shifts, was involved in the violations, so corporate should be on the hook. While the franchiser paid employees $235,000 in a settlement, a federal judge in San Francisco denied the class action against McDonald's, arguing that its oversight of store workers is centered on brand management and quality control issues, not day-to-day operations.
While these cases may signal that McDonald's could avoid monetary damage, the brand's image could suffer, possibly losing both customers and potential employees in a tight labor market.
