McDonald's squares off against NLRB in worker retaliation trial

Is chain 'joint employer' of workers at franchises?
By Karen Freifeld
|hrreporter.com|Last Updated: 03/10/2016

NEW YORK (Reuters) — A highly anticipated trial over whether McDonald's USA could be on the hook for its franchisees' alleged retaliation against employees who participated in fast-food worker protests across the United States began on Thursday.

At issue is whether Illinois-based McDonald's is a "joint employer" of workers at its independently owned franchises, as the National Labor Relations Board says. That would make the company liable for any labour law violations by the franchisees, which operate 90 percent of McDonald's U.S. restaurants.

The trial before an administrative NLRB judge in New York has attracted national attention because it is expected to show how the board's new standard for joint employment applies to the franchisor-franchisee relationship, although the ruling in the case will apply to McDonald's only.

In his opening statement, NLRB lawyer Jamie Rucker described the level of control McDonald’s has over its franchisees, setting everything from cleaning requirements and the number of seconds for order-taking to pre-packaged interview questions for prospective hires.

"If McDonald's is involved in determining working conditions at its franchised operations, it is responsible for what happens to workers subject to those conditions," Rucker said.

Workers began filing complaints with the Washington-based NLRB in 2012, saying that McDonald's and some franchisees threatened, surveilled, disciplined and fired them for protesting for higher wages and union rights in the demonstrations.

The NLRB’s general counsel issued complaints in 2014, eventually consolidating a case for trial against the company and franchisees in six cities.

McDonald's lawyer Willis Goldsmith said Thursday that the company "is not now and never has been" a joint employer and that its franchises are independent.

The company does not control who the franchisees hire or their workers' wages, benefits or schedule, Goldsmith said.

The NLRB expanded its joint employment standard in August in a landmark decision involving a Browning-Ferris Industries Inc waste management facility that used workers from a staffing agency. Under the old standard, a company had to have direct control over employment conditions to be a joint employer, but the new test considers indirect and unexercised control.

Finding that joint employment exists could make it easier for workers and unions to win higher wages and better working conditions since they would be negotiating directly with parent companies.

The International Franchise Association, various companies and Republican lawmakers have cast the new standard as an existential threat to the franchise model on which many businesses rely.

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