National Labor Relations Board disregards contract law in seeking to hold McDonald’s liable for individual franchisee employment conduct.
Labor unions have struggled over the past few years to gain a hold on the fast food industry, but a recent advisory opinion by the NLRB may have cracked the door for union organizers trying to breach the corporate-franchisee relationship.
On Tuesday, the NLRB’s General Counsel declared that McDonald’s as a corporate entity is a “joint employer” of employees at all of its restaurants–including those employed at its nearly 3000 franchisees. The problem with this ruling is that it flies in the face of the established law governing business associations: franchise contracts explicitly state that franchisees are independent and have complete authority over their own employees, and state and federal regulatory authorities generally respect these contracts as definitive in labor disputes.
McDonald’s Corporation isn’t taking the ruling lying down, though. Via the Washington Examiner:
“As the federal governments determination shows, McDonald’s clearly uses its vast powers to control franchisees in just about every way possible,” said Kendall Fells, organizing director of Fast Food Forward, president of the Fast Food Workers committee and a former SEIU organizer. “It’s time the company put those same powers to work to do something about the fact that its workers are living in poverty.”
A McDonald’s Corporation spokeswoman confirmed the ruling and said the company will continue to legally fight it “in the appropriate forum.”
“McDonald’s does not direct or co-determine the hiring, termination, wages, hours, or any other essential terms and conditions of employment of our franchisees’ employees – which are the well-established criteria governing the definition of a ‘joint employer,’” said Heather Smedstad, McDonald’s senior vice president for human resources.
The SEIU has spent years trying to build a case leading to this exact opinion. Under existing law, unions cannot breach the corporate-franchisee separation, meaning that labor organizers have to approach and organize employees at each individual franchise. If the courts uphold the NLRB’s ruling, labor organizers would be able to unionize the entire chain all at once, making it much harder for employees opposed to unionization to fight back.
Union organizers would have you believe that this fight is about “a selfish few at the top” using their power to keep wages low, and the families who depend on them in poverty; because this flies directly in the face of actual, written contracts, however, it is clear that unions are using this as an opportunity to whip up the employee base of fast food and retail enterprises.
McDonald’s Corporation is going to fight this ruling, this time in a proper legal forum. An adverse ruling, however, could create precedent invalidating thousands of existing, legal contracts between corporations and franchise owners.
In the mean time, it will give organizations like the SEIU an opportunity to tout the virtues of their job-killing $15 minimum wage proposal.