McDonald’s, NLRB Take “Joint Employer” Battle to Court
Last week, McDonald's and the National Labor Relations Board met in administrative court in a battle over whether the fast-food chain, which is largely made up of franchises, should be treated as an equal employer with its franchisees. The case is being closely watched in the dining and retail spaces.
The biggest headlines for McDonald’s these days have nothing to do with its relatively recent decision to start selling all-day breakfast.
Instead, the headlines have everything to do with the company’s labor practices—and a case that threatens to create challenges for the franchise model in the restaurant industry.
Last week, an administrative law judge in Manhattan began tackling the issue of whether McDonald’s should be considered a “joint employer” for its franchised locations—something that would effectively redefine the fast-food restaurants’ locations as part of a large business, rather than each franchise being considered a small business in the eyes of the law.
The court trial is the latest twist in the long-running labor dispute, which had the National Labor Relations Board (NLRB) deciding in 2014 that the parent company should receive the joint-employer designation. NLRB’s decision came about at a time of nationwide protests against low-wage fast-food jobs, and the labor complaints that led to the decision were supported by the Service Employees International Union.
In January, the NLRB decided to take the dispute to the administrative court in an effort to push McDonald’s to change its approach to labor relations.
The court’s action is expected to be closely watched by industry groups: The 2014 NLRB decision was roundly criticized by a number of trade groups, including the National Retail Federation and the National Restaurant Association.
The International Franchise Association, which is fighting a similar legal battle over Seattle’s minimum-wage law that the group recently appealed to the Supreme Court, threw its support behind the burger chain.
IFA also suggested that the McDonald’s case would be far from the last battle.
“IFA will continue to contest in all appropriate fora any attempt to change the long established joint employer standard to ensure franchising’s continued economic growth,” IFA President and CEO Robert Cresanti said in a statement. “Locally-owned small businesses are hoping they won’t be the next ‘test case’ by the NLRB as part of a larger strategy orchestrated by activists targeting the franchising business model in a single-minded attempt to grow their membership.”