NLRB Decision: Mcdonald’s As A Franchisor Is Responsible For Labor Violations Of Franchisees

By: Washington State Employment Law Lawyer Elizabeth L. Van Moppes

The National Labor Relations Board (NLRB) announced recently that it will bring charges against McDonald’s for conduct committed by its franchisees. Specifically, the NLRB is bringing thirteen cases involving seventy-eight charges against McDonald’s for alleged violations that took place against McDonald’s workers in several cities throughout the country, including Detroit, St. Louis, Manhattan, Philadelphia, Atlanta, Chicago, Kansas City, New Orleans, Los Angeles, Phoenix, San Francisco, Minneapolis and Indianapolis.  The NLRB’s claim is that McDonald’s and its franchisees retaliated against employees who participated in union‑related activities by reducing their hours, subjecting them to discipline, or outright firing them.

By proceeding with these cases against McDonald’s and its franchisees, the NLRB is asserting that McDonald’s can be liable as a “joint employer,” despite the fact that many of the alleged labor violations were committed by independent franchise owners.  This has immense implications for the franchise system, in general.

Unions are, of course, thrilled. According to the unions, McDonald’s requires its franchisees to adhere to a number of rules and regulations, such that there is no question that the franchisor is truly in charge. Franchisors, on the other hand, are horror-struck. Imagine the exposure to liability if the definition of “joint employer” is expanded to this degree. Franchisors could be held liable thus in any claim involving workplace conduct, including harassment and discrimination, even failure to accommodate claims.

The McDonald’s cases are set to proceed before administrative law judges beginning March 30, 2015.  The losing party is permitted to appeal the decision to the 5-member National Labor Relations Board in Washington, D.C.

If the NLRB is ultimately successful, McDonald’s and other franchisors could find themselves held liable for wage and workplace violations committed by any of their franchisees.  Obviously, parties on both sides of this debate are closely watching the situation.

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