In a move that could have far-reaching implications for franchised businesses and low-wage workers, the National Labor Relations Board’s general counsel said Tuesday that McDonald’s would be treated as a joint employer along with franchisees in 43 unfair labor practices cases. Setting this precedent would make it harder for the company to deny responsibility for wage theft and other abuses—like the cases that raised this question in the first place, with workers alleging they were fired in retaliation for participating in legally protected strikes. McDonald’s, like other franchise businesses, has traditionally claimed that it has nothing to do with labor practices in its restaurants, but the tight control the company exerts over every aspect of management of its franchisee-owned restaurants points to a different conclusion:
… advocates argue that the fast-food giant’s franchise agreement and actual business practices are so restrictive and pervasive that franchise owners have little latitude with their staffing arrangements and no choice but to keep labor costs as low as possible. In a somewhat unusual arrangement, McDonald’s even controls its own real estate and extracts exorbitant rents from its franchisees, who are on the hook for expensive renovations. All that has driven profit margins down to the point where former McDonald’s executive Richard Adams, now a consultant, estimates that about a quarter of franchises don’t even generate positive cash flow for the owner. That doesn’t give them many options.
Steven Greenhouse flags another important detail in figuring out whether McDonald’s exerts control as an employer over workers at franchise restaurants:
McDonald’s has even warned some franchisees that they were paying their workers too much.
If McDonald’s thinks it’s the company’s business to correct when workers are being paid too well, shouldn’t it be held responsibly when they’re not paid enough, or are fired illegally? It seems that the NLRB agrees. McDonald’s is, of course, challenging that.
Laura Clawson reports on labor and other issues at Daily Kos where this post first appeared.