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NLRB goes after McDonald’s and franchise systems everywhere

NLRB goes after McDonald’s and franchise systems everywhere

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.


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TrooperJohnSmith | July 30, 2014 at 10:43 am

OSHA calls this “multiple employer” but usually confines it to a company and its vendors. Trial loiyas call it “deep pockets”. But there is at least some basis for the aforementioned.

The NLRB is like everything 0bama: partisan, corrupt and lawless.

Where is RICO when you really need it?

    JackRussellTerrierist in reply to TrooperJohnSmith. | August 2, 2014 at 1:02 am

    RICO is working for Eric “My people” Holder.

    Holder is obamullah’s right-hand man.

    Therefore, the use of RICO force will only be applied to whites and private enterprise until at least 2017.

Spiny Norman | July 30, 2014 at 11:01 am

Hasn’t the Court ruled Obama’s “recess appointments” to the NLRB to be invalid? Shouldn’t that make this panel’s decisions invalid also?

    Ragspierre in reply to Spiny Norman. | July 30, 2014 at 11:41 am

    As I read the account, this is not a panel decision, but a holding by the General Counsel.

    Dunno fer sure…

    Milhouse in reply to Spiny Norman. | July 30, 2014 at 12:10 pm

    There are no recess appointments currently on the NLRB. All members have been confirmed by the senate.

    But the NLRB’s very existence is illegitimate. It has always been a lawless entity, a tool of union thuggery, constantly looking for what it can get away with next to help the unions steal more money and gather more power. It must be abolished, and if that can’t be done, then the next Republican president should unilaterally “waive enforcement” of all NLRB regulations and decisions.

MouseTheLuckyDog | July 30, 2014 at 11:15 am

This only brings closer the day that fast food place start using robots to get my order straight.

    The last time I was at the counter at McDonalds, I thought I was in damn Central America.

    Some of the employees couldn’t understand ‘# 2 combo, hold the pickle’. There was a manager standing behind them translating to Spanish for them.

    And most of the customers on line were OK with that. seeing as they didn’t speak English either.

    “This only brings closer the day that fast food place start using robots to get my order straight.”

    Yep. Hell they are well on the way to it now. The ‘voice behind the clown’ is sitting in Bangalore, India. Pushing little touch-screens with pictures of #2 combos milk shakes and such.

    Sounds like $ 15 / hour to me !!!! Not.

      Bruce Hayden in reply to pjm. | July 30, 2014 at 12:06 pm

      Interestingly, here is Colorado, where you would expect the staff to be primarily Hispanic, they are primarily east Asian. I am thinking Chinese, but could be mistaken. Which sometimes can be a bit humorous, when Hispanic immigrants show up, and try to order from the (probably) Chinese speaking staff. Staff is big enough, that there is usually someone Spanish speaking working, just not the registers.

      JackRussellTerrierist in reply to pjm. | July 30, 2014 at 4:21 pm

      Those employees and customers will not even bother to learn to say “diabetes”, “Heart attack” and “morbidly obese” in English, either, terms they’ll need to learn soon enough.

      So, folks working at fast food places, once just entry level jobs for kids to learn basic job skills such as showing up on time, neat, clean, sober, and ready to work, are now career choices for which they “deserve” adult wages for running a household. I guess that’s the case when you’re fathering or bearing child after child out of wedlock and your food stamps, EBT, obamaphone, free medical and housing subsidy just won’t stretch far enough to afford that 70″ flat screen AND a new car payment.

      It’s an obama nation now.

Haven’t the NLRB Obama appointees been removed from their positions since the SCOTUS ruling?

The SEIU is desperate because of the law of diminishing returns or dues in this case. They must think there are enough corrupt “union sympathizers” on the NLRB to nullify contract law without any reprisals (read: lost emails; no tape back ups)

And, isn’t the SEIU something like a franchise system, too? A labor pyramid scheme, perhaps?

    No, by the time the SCOTUS ruled on the recess appointments there weren’t any. All members have been confirmed. The ruling was about actions the board took during the time that they had these bogus appointments.

Typical Obama m.o.

Don’t like existing law? Then just ignore it!

Why hasn’t the president been impeached for all of his supposed “lawlessness”?

    JackRussellTerrierist in reply to Gus. | July 30, 2014 at 4:24 pm

    Two words answer that: John Boehner.

    Sanddog in reply to Gus. | July 30, 2014 at 6:03 pm

    Because it’s a meaningless act without a Senate willing to remove him.

      platypus in reply to Sanddog. | July 30, 2014 at 10:51 pm

      Not meaningless. It would show in writing each act of which no authority exists AND it could be used as a political weapon against those House members who voted no.

      And depending on the amount of effort, Senators could be swayed IF they thought their careers depended on voting yes to convict.

      Keep in mind that there will be a trial if articles of impeachment are passed. Lots of video snippets would be hiding in the C-Span wall-to-wall coverage.

    veseng in reply to Gus. | July 30, 2014 at 11:11 pm

    No way the Senate would convict. The house brings articles of impeachment but the Senate holds the trial presided over by the Chief Justice of the Supreme Court. It takes 2/3 of the Senate voting to Impeach.

    Oh, and you must be a racist to even ask! /sarc

This administration cares nothing about contracts or the rule of law. The law is whatever Obama says it is at any given time, subject to change without notice. Welcome to our new Banana Republic.

legalizehazing | July 31, 2014 at 12:17 am

I admit it, I am hateful when it comes to unions. The idea that legally a majority can vote to abridge my individual rights really makes me boil. I’m glad LI is covering this.

The idea that these clowns are going to effect thousands of people’s lives .. Sigh.

well, this would certainly be a good way to drive thousands of small entrepreneurs out of business, and into bankruptcy, which, i submit, is the ultimate goal of the exercise.