The National Labor Relations Board on Friday issued 13 complaints against McDonald’s and some of its franchisees, calling them joint employers and alleging they violated labor rights of employees at various restaurants nationwide.
The labor board found merit in 86 cases filed in cities from New York to Chicago to San Francisco. The cases allege that Oak Brook-based McDonald’s and its franchisees retaliated against employees for engaging in activities, including nationwide protests calling for higher wages and better conditions.
Retaliation included threats, surveillance, reduction of hours, interrogations and firings, the labor board said.
The ruling, which McDonald’s vowed to appeal, is significant because it could increase the fast-food giant’s responsibility in labor cases and, potentially, that of other types of employers, as well.
“It’s a game-changing decision,” said Robert Bruno, a professor of labor and employment relations at the University of Illinois at Chicago.
Bruno said the decision shatters the wall that has kept franchisees and franchisers separate. For years, labor groups have complained the wall keeps major corporations from taking direct responsibility for their employees.
McDonald’s has long maintained that its franchisees are independent owner-operators who set their own policies, including wages, while adhering to corporate standards in areas such as food preparation and restaurant design.
But the board said its investigation found that McDonald’s “engages in sufficient control over its franchisees’ operations, beyond protection of the brand.”
In a statement, McDonald’s said it is disappointed with the board’s decision and will contest the joint-employer designation and the unfair labor practice charges.
“The National Labor Relations Board’s actions today improperly and dramatically strike at the heart of the franchise system — a system that creates economic opportunity, jobs and income for thousands of business owners and their employees across the country.
“This relationship does not establish a joint employer relationship under the law — and decades of case law support that principle,” the company said.
Business groups said the NLRB’s decision brings uncertainty to business owners and investors because it could affect a range of employers beyond McDonald’s, such as companies that rely on workers hired through staffing agencies and other companies with franchise models.
“It is a devastating blow to this industry,” said Robert Cresanti, executive vice president of government relations and public policy at the International Franchise Association.
Fight for $15, the union-funded group that has organized protests against McDonald’s and other fast-food chains since 2012, welcomed the decision.
“McDonald’s exerts such extensive control over its franchised business operations that, for all intents and purposes, McDonald’s is the boss,” Organizing Director Kendall Fells said on a conference call. “It’s obvious that the company should share responsibility with franchisees for the treatment of its workers.”
About 90 percent of McDonald’s U.S. restaurants are owned by franchisees. McDonald’s workers have filed more than 290 cases with the NLRB since November 2012, when organized protests against the fast-food industry began in New York.
On Friday, the NLRB said that in addition to the 86 cases that have merit, 11 have been resolved and 71 remain under investigation. Others have been dismissed. About 10 of the 86 meritorious cases solely involve corporate-owned McDonald’s locations, the NLRB said. About a quarter of the cases are from Chicago.
The employees belong to the so-called Fight for 15 movement, which aims to raise wages at fast-food restaurants to $15 an hour. McDonald’s has been the main target of the campaign, but unfair-labor-practice charges have also been filed against other restaurants, including Burger King. Organizers, backed by the Service Employees International Union, also hope to create a fast-food-workers’ union.
The agency said representatives from its general counsel office tried to settle the cases but “those efforts have largely been unsuccessful.” Hearings before an administrative law judge have been scheduled in Manhattan, Chicago and Los Angeles to “address the violations that require remedial relief as soon as possible.”
If a settlement is not reached, initial litigation will begin on March 30. McDonald’s and its franchisees could be required to pay back wages and reinstate fired workers.