In a ruling being hailed by union groups and wage rights advocates, the National Labor Relations Board (NLRB) found Tuesday that fast food giant McDonald's can be considered a joint employer of workers employed by its franchise restaurants, meaning the corporation can be found liable for labor and wage violations that previously only franchisees could be found liable for.
The NLRB's general council stated that he "found merit in some of the charges" that McDonald's "violated the rights of employees as a result of activities surrounding employee protests." Specifically, 43 cases were found to have merit with 64 still pending investigation.
The decision comes in response to 181 separate cases filed since November 2012 by McDonald's workers alleging that their involvement in minimum wage protests resulted in unfair retaliation, including firings and cut hours, by their employer.
"Employers like McDonald’s seek to avoid recognizing the rights of their employees by claiming that they are not really their employer, despite exercising control over crucial aspects of the employment relationship," argued labor law professor Julius Getman. "McDonald’s should no longer be able to hide behind its franchisees."
While McDonald's plans on contesting the decision, if upheld it could have broad implications for labor and union rights nationwide.
The decision revolves around the concept of what level of control a parent company must have over a franchise's operational practices in order to be considered a "joint employer."
As the New York Times reported:
The fast-food workers who filed cases asserted that McDonald’s was a joint employer on the grounds that it orders its franchise owners to strictly follow its rules on food, cleanliness and employment practices and that McDonald’s often owns the restaurants that franchisees use.
Tuesday's ruling by the general council appears to be a return to a 1982 federal appeals court decision which found that two or more employers merely needed to exert "significant control" over the same employees, says the Times. In recent years the NLRB has taken the stance that there must be direct control over a franchise's employment practices by a parent company in order for it to be considered a joint employer.
Heather Smedstad, a McDonald's senior vice president, said that the company "believes that this decision changes the rules for thousands of small businesses, and goes against decades of established law."
But lawyers representing McDonald's workers dispute that claim.
"The reality is that McDonald’s requires franchisees to adhere to such regimented rules and regulations that there’s no doubt who’s really in charge," said Micah Wissinger, an attorney representing McDonald's workers in New York City.
McDonald's franchises account for around 90 percent of the company's restaurants nationwide. The International Franchise Association estimates that 8 and a half million Americans are employed by a franchise of some kind.
While Tuesday's ruling was hailed as a victory by organized labor, the final verdict on what constitutes a parent company's culpability remains unclear. According to the Times, "Given that McDonald’s is arguing that the legal counsel’s ruling goes against three decades of law, the case could ultimately wind up before the Supreme Court."