Ruling Says McDonald’s Is Liable for Workers
July 29, 2014
By Steven Greenhouse
New York Times (July 29, 2014)
A major ruling by the NLRB states that McDonald's is jointly responsible for the working conditions in its franchises. This ruling will have major impacts for the company and other corporations that have increasingly relied on the franchise model.
Fast-food workers outside a McDonald’s in Detroit in May, part of a wave of strikes and protests across the United States. Credit Paul Sancya/Associated Press
The general counsel of the National Labor Relations Board ruled on Tuesday that McDonald's is jointly responsible for workers at its franchisees' restaurants, a decision that if upheld would disrupt longtime practices in the fast-food industry and ease the way for unionizing nationwide.
Richard F. Griffin Jr., the labor board's general counsel, said that of the 181 unfair labor practice complaints filed against McDonald's and its franchisees over the last 20 months, he found that 43 had merit on such grounds as illegally firing or threatening workers for pro-union activities.
In those cases, Mr. Griffin said he would include McDonald's as a joint employer, a classification that could hold the fast-food company responsible for actions taken at thousands of its restaurants. Roughly 90 percent of the chain's restaurants in the United States are franchise operations.
McDonald's said it would contest the decision, warning that the ruling would affect not only the fast-food industry but businesses like dry cleaners and car dealerships.
The N.L.R.B. ruling is wrong, according to a statement by Heather Smedstad, a senior vice president for McDonald's, because the company does not determine or co-determine decisions on hiring, wages or other employment matters. "McDonald's also believes that this decision changes the rules for thousands of small business, and goes against decades of established law," Ms. Smedstad said.
Throughout the debate to increase the minimum wage to $10.10 an hour, alongside the efforts by fast-food workers and labor advocates to pressure McDonald's and other restaurant chains to adopt a $15 wage floor, the companies have often said that they don't set employee wages, franchise owners do. That defense would be weakened considerably by the workers' push to have them declared joint employers.
In a statement, Angelo Amador, vice president of labor and work force policy for the National Restaurant Association, called the ruling another example of the Obama administration's anti-small-business agenda. The ruling, he said, "overturns 30 years of established law regarding the franchise model in the United States, erodes the proven franchisor/franchisee relationship, and jeopardizes the success of 90 percent of America's restaurants who are independent operators or franchisees."
If upheld, the general counsel's move would give the fast-food workers and the main labor group backing them, the Service Employees International Union, more leverage in their effort to unionize McDonald's restaurants and to increase hourly wages. The average fast-food wage is about $8.90 an hour.
Mr. Griffin said in a letter that of the 181 cases filed against McDonald's and its franchisees since November 2012 - the month the first one-day strike was conducted against McDonald's and other fast-food restaurants - he dismissed 74. Of the 107 other cases, he said he was still investigating 64, while his office found 43 had merit.
The Associated Press first reported the ruling on Tuesday. Ms. Smedstad told The A.P. that the labor board had notified the company of the ruling on Tuesday.
David French, senior vice president with the National Retail Federation, called the decision "outrageous." "It is just further evidence that the N.L.R.B. has lost all credibility as a government agency established to protect workers and is now just a government agency that serves as an adjunct for organized labor, which has fought for this decision for a number of years as a means to more easily unionize entire companies and industries," he said.
The fast-food workers movement has argued that McDonald's should be considered a joint employer because it owns many of the franchisees' restaurant buildings and requires franchises to follow strict rules on food, cleanliness and hiring. McDonald's has even warned some franchisees that they were paying their workers too much.
The cases were brought on behalf of workers who assert, among other things, that they were wrongfully fired, threatened or suspended because of their campaign for a $15 a wage and to unionize McDonald's.
"McDonald's can try to hide behind its franchisees, but today's determination by the N.L.R.B. shows there's no two ways about it: The Golden Arches is an employer, plain and simple," said Micah Wissinger, a lawyer in New York who filed some of the cases against McDonald's. "The reality is that McDonald's requires franchisees to adhere to such regimented rules and regulations that there's no doubt who's really in charge."
The next stages for the cases could involve Mr. Griffin's trying to seek a settlement. But the cases more likely will be argued before an administrative law judge.
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