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NLRB Names McDonald's, Franchisees as Joint Employers in 13 Complaints

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By William Peacock, Esq. on December 22, 2014 9:52 AM

In a batch of cases that could become indescribably dangerous precedent for any business that operates on a franchise model, the National Labor Relations Board has filed 78 charges across 13 complaints against McDonald's USA, LLP, as well as its franchisees, as joint employers of allegedly aggrieved fast-food workers.

Why could the outcome of these cases be so monumental? Because the NLRB is trying to hold the big McCorporation liable for the alleged actions of arguably independent franchisees.

What Sort of Violations Are We Talking About?

We're talking about alleged retaliation for participating in the fast food protests that you may have seen in the news over the past few years. Workers want higher wages. Fast food franchisees don't want to pay them. When the workers hit the streets and protest, their hours and/or jobs are negatively impacted.

If the allegations are true, this is a pretty cut and dry case of retaliation for protected speech about working conditions -- Section 7 of the NLRA (aka. the NLRB's favorite section for nuking workplace conduct policies and social media policies over the past few years).

And Joint Employers Are...?

The joint employer test is a fact-based inquiry that requires employees to show that, despite being employed on paper by a subcontractor, they are actually doing work that directly or indirectly benefits the big corporation.

But, because franchisees and franchisors have such a loose relationship -- franchisees typically manage their own staff, business operations, and the like -- joint employer liability has never reached that far.

Is This Gambit Going to Work?

There's the big legal question: Can the big corporation be held liable for the conduct of franchisees who set their own policies and manage their own workers as they see fit?

Way back in the day, I was a McBurger flipper. I was also an employee of a franchisee -- the plaque on the wall, the paychecks, and all the paperwork said the name of the guy who owned a handful of local restaurants, not McDonald's USA, LLP. The franchisee made the decision to hire me, to hire others, and to fire others, yet McDonald's benefited from my labor, as I sold their products under their brand name -- the stuff that gets reported in their month-over-month same restaurant sales figures.

Traditionally, joint employer liability was a tool for nailing parent companies that hide behind subcontracting firms. As my fellow FindLaw blogger Mark Wilson explained in July, the NLRB recently asked for briefs on whether it should expand the definition of joint employers. Shortly thereafter, the NLRB's General Counsel issued a call for complaints against McDonald's and its franchisees.

It's almost certainly not a coincidence: The NLRB is trying to close that gap between subcontractor relationships and franchising. This case is the big test to see if their wider interpretation will work. According to CNN Money, the NLRB's general counsel will make the argument to an administrative law judge to see if the untested legal theory pays off.

McDonald's and other franchise-model businesses, as well as workers' rights groups, will be watching.

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