Key ruling could force changes at McDonald's

Should the fast-food chain act as the boss of all workers in franchised stores? The company says no, but organized labor says yes.

By MSN Money Partner Jul 30, 2014 12:56PM

A McDonald's employee prepares an order at a McDonald's restaurant on April 19, 2011 in San Francisco, Calif. (© Justin Sullivan/Getty Images)By Josh Eidelson, Businessweek

The fast-food business model just suffered a blow. 

The top prosecutor for the federal labor board has rejected McDonald's (MCD) claim that it's not the boss of the workers in its franchised stores.

Within the past 21 months -- the period in which strikes by fast-food workers went from unheard-of to increasingly common -- union-backed McDonald's workers have brought 181 charges before the National Labor Relations Board. On Tuesday the NLRB general counsel's office announced it had found dozens of allegations with enough merit to pursue. 

And, more important, the general counsel directed NLRB officials to treat McDonald's as a defendant alongside the franchisees running the stores. Giving McDonald's shared responsibility for how franchisees treat workers could force corporate headquarters to get involved more closely with everything from potential unionization to wages.

Micah Wissinger, an attorney who represents McDonald's workers in New York City, ticked off the reasons why the company should share responsibility with franchisees in the NLRB cases. McDonald's uses "computer systems that measure and track every aspect of the store's operations," he said on a conference call Tuesday.

McDonald's, of course, will vigorously contest such a conclusion. The NLRB action, the company said in a statement, threatens to "changes the rules for thousands of small businesses and goes against decades of established law regarding the franchise model in the United States."

The five presidentially appointed members of the NLRB in Washington have already invited briefs on the question of who qualifies as a joint employer in a different case involving a recycling company. If they ultimately reach the same conclusion on McDonald's as the general counsel did, and hold McDonald's responsible for alleged lawbreaking at its franchised stores, you can expect McDonald's to appeal the decision to federal court. And congressional Republicans can be expected to raise a furor, as they did when the NLRB investigated the aerospace giant Boeing (BA).

Having McDonald's treated under law as a boss of the workers in its thousands of franchised stores poses a threat to the company on several fronts. First, it would raise at least the theoretical threat of workers at a store filing with the government for a unionization election -- although that's a route recent history suggests the Service Employees International Union, the key player behind the recent strike wave, would be extremely unlikely to pursue. Second, it would strengthen the case for treating McDonald's as a co-defendant in pending cases alleging rampant wage theft.

And third, it's a symbolic victory for organized labor's efforts to convince the public that fast-food corporations are responsible for abuses in the industry, from poor pay to on-the-job injuries. That brings the SEIU closer to its still-distant goal: forcing so much pressure, humiliation, and disruption on the industry that the top corporations -- not the individual franchisees -- choose to negotiate over changes to their business model.

"At some point," Fast Food Forward Organizing Director Kendall Fells told reporters, "McDonald's and the industry as a whole will decide that it makes sense to sit at the table with these workers, because the workers have now changed the power dynamic between them and the actual corporations."

More from Businessweek

Jul 30, 2014 2:42PM
You folks that are rooting for McDonalds to pay more had better beware: if labor becomes more expensive than machines, machines will replace the labor. You guys just may be protesting yourselves out of a job in the near future.
Jul 30, 2014 1:57PM
Abso-frigging-lutely ridiculous!!!! What ever happened to the idea of skilled (higher wage) vs unskilled (low wage) labor? This is SUCH bullsh*t!!!! How can supporters of this crap even do it with a straight face???
Jul 30, 2014 2:09PM
My job is 20 times harder than flipping burgers and I only make 11.00 an hr, These fast food restaurants DO NOT DESERVE anything more than what they are getting! As harsh as it may seem, they dont.
Jul 30, 2014 2:47PM
Wages depend on the type of job & education required.  Flipping hamburgers & pulling out french fries when the timer beeps requires the IQ of a fly so $15 an hour is completely ridiculous!!!  Fast Food restaurants were never meant  to be "career jobs" unless you want to be the manager or promoted to Corporate and the ones flipping burgers are not on that career path.  Sorry, but that is how I see it.
Jul 30, 2014 1:41PM
They want 15 an hour for flipping a bunch of flippen burgers,then they turn around and
want to destroy the burger flippen industry!! Liberals are truly schizophrenic Marxists hell-bent
on an developing the new Political party: KAOS!! 

Jul 30, 2014 1:39PM
So, clearly the intent is to make the playing field absolutely level.  reward mediocrity and punish excellence.  This is the mantra of organized labour for years and now is festering at every aspect of daily living.
Perhaps McD should just start closing the "under production" facilities.

Jul 30, 2014 3:16PM

Why be a Private in the military? Risking your life overseas for your country for a CAREER.


15$ an hour "Would you like some fries with your shake"


SIGN ME UP... When did it stop being: putting a HONEST days work for an HONEST days wage.


Flipping burgers are for High School Kids


20+ Years Retired ARMY....GO cry to someone else who gives a $h!t...

Jul 30, 2014 1:32PM
Apparently Obama's NLRB is just as bad as his EPA.   

What's next - if I hire a general contractor to build a house, are all his subcontractors basically my employees now?  I guess I should be forced to provide health insurance for them, too.  And an EPA agent will probably pop out from behind a tree and fine me for excessive pollution after they fire up a 30 yr old tile saw.

Jul 30, 2014 1:43PM
Well, Joan Kroc thought liberalism was the way to go. I guess she'll get her wish. 10 years to automate all fast food restaurants leaving the whiners jobless.
Jul 30, 2014 3:04PM
The pro-union gooners are too stupid to realize that if McD's or any other franchise is forced to pay $15/hr., they will automate the hell out of their stores and shed about 80% of the work force. Big win for the unions, eh? Machines don't whine, pay union dues, file baseless grievances and look for a way to get out of work.
Jul 30, 2014 1:35PM

Since union contracts pay scales are based on what the minimum wage is, it's no wonder they want it raised. Union workers get a like percentage of pay raise. Trouble is, the minimum wage worker will only have the same amount of buying power due to the inflationary effects of an across the board pay hike.

Jul 30, 2014 2:21PM
Why does a high school student need a living wage? How would you differentiate between a high school student that is just working for extra cash and a single mom or dad that needs a living wage?  Wait a minute.......maybe the single mom or dad should get a full time job working somewhere known for paying better than McDonald's. 
Jul 30, 2014 1:25PM
Does not matter what they say. Obo made all decisions null and void by violating the constitution.

Jul 30, 2014 4:20PM
Here's an idea.  If you don't like flipping burgers and shaking the fry basket for decades, try bettering yourself and try to find a real job where you can expect a living wage because it is WORTH a living know, with some degree of skill and intelligence required beyond a brain stem.
Jul 30, 2014 3:01PM
Fifteen dollars an hour is unreasonable. I understand that people do deserve more and that high wage will trickle down to the consumer meaning they will pay more for their food or they wont come at all.  JeffreyjamesHopkins
Jul 30, 2014 2:37PM
The GD answer is eff no you libtard scurnbags!  And btw - you are not supposed to be reproducing if you aren't smart enough to secure anything but a minimum wage paying job so stop propping your pathetic genes into our society you effen dead beats!  And if you are reading this post, you are even more pathetic!  You should be working a second job so I don't have to pay for your pathetic offspring!
Jul 30, 2014 3:41PM
Another backed blunder. Like most other agencies, the NRLB should be closed promptly. Everything the touches goes to hell. ©2014
Jul 30, 2014 3:13PM
What ever that will cost businesses the most and their hope of making it harder for businesses to survive, that what these Liberals are for. When McDonalds goes out of business, Odima's government will take over and you'll be eating Government Burgers like you're driving Government Motor Company cars. Follow what the EPA does and you'll see they're using the same method. The EPA is made up of Watermelons, Green on  the outside, Red on the inside. And notice, what ever they do, none of it is good for America, but all bad. Keep Track of These People.
Jul 30, 2014 1:22PM

....for fifteen Obama Dollars an hour.....mmm, mmm, mmm! 

Jul 30, 2014 4:05PM
If fast food restaurant workers are given $15.00 an hour you will pay $10.00 for a hamburger. It's an unskilled job and intended to be an entry level job. Learn a trade and you will be payed more. These people have no understanding as to what they will be getting themselves into. Most people don't stay in the job long enough to get into a union and when the union takes their dues for the pockets of the union reps, you really won't be getting much. These people had better think long and hard about what they are trying to do. They will really be hurting themselves and they also do not deserve $15.00 an hour.
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