NLRB: McDonald's Can No Longer Duck Responsibility for Bad Labor Practices

On Tuesday the U.S. National Labor Relations Board found that McDonald's is a joint employer with its franchisees and can be held accountable for the franchisee's poor labor practices. The NLRB sided with workers who filed cases against McDonald's claiming that the corporation is the one really calling the shots because it exerts tight controls on nearly every aspect of a given store's operation, including employment practices.

This has broad implications for many other companies with closely-controlled franchise requirements, and may even pave a trail for the fast food unionization movement.

In April I wrote about a Hart Research Poll which showed a shocking 89 percent of fast food employees faced some form of wage theft. Such wage theft comes in many forms from requiring work before clocking in and after clocking out, to making all sorts of unjustified automatic deductions from employee paychecks, including meals that were never eaten or items that went missing from the restaurant. For one of the most egregious forms of wage theft, employers exploit the corporation's own time management software to doctor employee paychecks, shortening time or making it seem like employees had gotten a break when they hadn't.

And yet, when these rampant problems come to the fore, major fast food corporations have traditionally been able to say, "It wasn't us, it was the franchisee."  While the corporate entity may hold tight control over business practices all the way down to the color of the drapes, they have classically held that they aren't accountable for poor labor practices because they don't control that part. This week's decision will make it a lot more difficult for McDonald's to make that claim and distance itself from the bad labor practices of its franchisees.

According to the NLRB, McDonald's very much does exert influence over labor practices. The corporation supplies software that tells the owners and managers how many employees to use in a given hour, as well as the software employers exploit to doctor time cards. McDonald's also has the ability to intervene when they believe an employer is paying its employees too much.

This week's decision is a result of 181 complaints from McDonald's employees who felt they were illegally fired, threatened or somehow penalized for their pro-labor activities. Richard F. Griffin Jr., the labor board’s general counsel, said that out of the 181 complaints, he found merit in 43.

Unsurprisingly, McDonald's is planning on challenging the decision. The company warns it sets a dangerous precedent that would impact businesses from dry cleaners to car dealerships and possibly even staffing agencies, and that it flies in the face of decades of established law. For certain, it imposes a bigger liability burden on corporations and would require closer scrutiny of franchisee labor practices.

The bigger problem for McDonald's, however, may be the implication the ruling has regarding a national pro-labor drive to increase fast food worker wages to $15 per hour. Previously, McDonald's was able to shed itself of involvement saying it doesn't set employee wages and has no influence over what franchisees pay. That defense is cracked by the NLRB's new stance, and opens the doors to giving union advocates a single entity with which to negotiate and from whom to demand higher wages.

Image credit: Mike Mozart : Source