The National Labor Relations Board (“NLRB”) ended 2014 by filing over a dozen complaints across the country charging McDonald’s franchisees and their franchisor, McDonald’s USA, LLC, with violations of the National Labor Relations Act (“NLRA”). The allegations relate primarily to protest activities directed at McDonald’s and other fast food restaurants concerning pay and working conditions. According to the complaints, McDonald’s employees were subject to unlawful discipline, threats, interrogations, etc., in retaliation for their participation in these activities.
Franchisor Named In Complaint
The inclusion of McDonald’s USA, LLC (the franchisor) as a named party in the complaints came after the Office of the General Counsel for the NLRB determined that, in its view, the franchisor is a “joint employer” with the individual franchisees. Minneapolis and Chicago are among the locations where the NLRB issued complaints in mid- to late-December.
As expected, McDonald’s USA, LLC will contest the NLRB’s position as to joint employer status, arguing that, as a parent company, it helps provide “resources” to its franchisees – through things like brand name recognition and operating material – but lacks meaningful control over workplace conditions.
The complaints filed by the NLRB allege that a joint employer relationship exists where McDonald’s USA, LLC has “a franchise agreement with [the franchisee], possessed and/or exercised control over the labor relationship policies of [the franchisee] and has been a joint employer of the employees of [the franchisee].” The complaints filed in Minneapolis (Region 18) and Chicago (Region 13) offer little factual support for the assertion that McDonald’s has “extensive influence over the business operations of its franchisees.” McDonald’s has already filed motions requesting more information and claiming that the NLRB’s complaints are unconstitutionally vague. Without additional facts, McDonald’s says it cannot appropriately defend itself and it will be denied due process of law in violation of the U.S. Constitution and federal law.
In a McDonald’s Fact Sheet published by the NLRB on its website, the Agency has summarized its joint employer theory as follows:
Our investigation found that McDonald’s, USA, LLC, through its franchise relationship and its use of tools, resources and technology, engages in sufficient control over its franchisees’ operations, beyond protection of the brand, to make it a putative joint employer with its franchisees, sharing liability for violations of [the NLRA]. This finding is further supported by McDonald’s, USA, LLC’s nationwide response to franchise employee activities while participating in fast food worker protests to improve their wages and working conditions.
Only time will tell if this argument is factually and legally supportable.
Bottom Line
The concern for McDonald’s, and other franchisors, is the potential for liability where they have not been directly involved with workplace decisions and conditions such as hiring, firing, discipline and supervision at each franchise location. A hearing is scheduled to commence in Chicago on March 30, 2015, where we are likely to learn more of the NLRB’s factual basis behind its joint employer theory.
We will keep you updated as to any significant developments.