NLRB General Counsel Pursues Complaint Against McDonald's as 'Joint Employer'

Author: Melissa Gonzalez Boyce, XpertHR Legal Editor

August 1, 2014

In a startling move, the National Labor Board Office of the General Counsel (OGC) has announced that it authorized complaints on 43 unfair labor practice (ULP) charges against McDonald's franchisees and determined that McDonald's, USA, LLC, the franchisor, will be named as a "joint employer." The OGC's intention to proceed with ULP charges against a parent franchisor and to hold it responsible for the employment practices of its franchisees conflicts with a decades-old legal standard and may have far-reaching implications for the current franchise model.

According to the OGC, it has investigated 181 ULP cases since November 2012 alleging that McDonald's franchises and their parent franchisor, McDonald's USA, LLC, violated employees' rights under the National Labor Relations Act to engage in employee protest activities. Of those 181 ULP cases, 68 cases were found to have no merit and 64 are currently being investigated. The OGC found merit in 43 of the remaining cases. If the parties are not able to reach a settlement in these 43 cases, the OGC will issue complaints against McDonald's franchisees and McDonald's USA, LLC as a joint employer respondent.

Under the current standard followed by the National Labor Relations Board, two or more employers must share or co-determine matters governing essential terms and conditions of employment in order to be considered "joint employers." Typically, the franchisor-franchisee relationship is based on a division of responsibilities with the franchisee left in control of the hiring, firing and overall management of the labor force. In the event that these matters result in litigation and a ruling by the National Labor Relations Board that McDonalds USA and its franchisees are, in fact, "joint employers," it could overhaul the franchise model and force parent franchisors to exert more control over the day-to-day employment decisions at each franchise location. Significantly, such a decision will also strengthen the already aggressive movement by franchise employees to organize now that McDonald's may have a seat at the negotiating table.