by Michael Scimone, Associate, Outten & Golden LLP.
Last Tuesday, the National Labor Relations Board’s (“NLRB”) General Counsel announced that his office would prosecute McDonald’s USA, LLC for unfair labor practices committed by its franchisees (i.e., the individual restaurants not owned by the corporation, which is most of them). That means that the NLRB may hold McDonald’s liable if its nominally “independent” franchisees interfere with or retaliate against workers who try to form unions, strike, or demand better pay or working conditions.
The GC’s move is an effort to apply common sense to an all-too-common legal dodge. McDonald’s claims that its franchisees are free to make their own decisions about labor matters. But that’s hardly true in practice. Fast food franchisors like McDonald’s have enormous leverage over their franchisees. McDonald’s computers track franchisees’ sales and labor costs, monitor employee schedules, and calculate how much labor the stores need. And McDonald’s is famous for controlling just about everything else in its restaurants – where they buy supplies, how they cook their food, and how they advertise the brand. It even owns the restaurants themselves. What’s left for the franchisee to control? Is it realistic to imagine that a franchisee could bargain over wages, schedules, or health and safety without McDonald’s at the table?
The franchisor-franchisee smokescreen allows McDonald’s to avoid responsibility for a range of labor abuses, from anti-union interference to wage theft. McDonald’s workers have filed multiple lawsuits seeking to hold McDonald’s, along with its franchisees, responsible for ripping off workers by making them work off the clock and stealing their already-low wages. McDonald’s, of course, denies all responsibility.