McDonald’s Labor Case May Signal End of Franchise Model As We Know It

McDonald’s announced Monday that it will settle a U.S. labor board case on whether the company is responsible for labor law violations committed by its franchisees.

The settlement is now pending approval by a National Labor Relations Board judge, but if successful it would allow McDonald’s to avoid a ruling that it is a “joint employer” of workers at individual McDonald’s franchises  — which would mean it could be held accountable when franchisees break federal labor laws.

McDonald’s has not admitted to any wrongdoing or violations and announced in a statement that it was happy with the resolution.

“While the settlement is not yet final, we believe this is a major first step in ending this wasteful multi-year litigation,” the company said.

The precise details of the settlement have yet to be disclosed.

Business leaders argued that a ruling against McDonald’s could upset the entire franchising model in the U.S. by making the parent company vulnerable to lawsuits and requiring them to bargain with franchise workers unions.

Union-endorsed workers’ rights group “Fight for $15” filed dozens of legal claims on behalf of McDonald’s workers beginning in 2012. The group said workers across the country have been fired for participating in protests for higher wages.

Earlier this year, the judge agreed to hold off on the trial against McDonald’s that started back in 2015 so that NLRB General Counsel Peter Robb, an appointee of President Trump, could continue settlement talks with the company.

Fight for $15 lawyer Micah Wissinger stated that the group would oppose the proposed settlement. “In a real settlement, McDonald’s would take responsibility for illegally firing and harassing workers fighting to get off food stamps and out of poverty,” he said.

The case is regarded as an important test of the implications of a 2015 NLRB decision, which worried business groups by making it easier to prove that a company is a joint employer.

In December, a new Republican majority on the board overturned the 2015 decision and said only companies with direct control over workers may be considered joint employers.

Last month, the board declared the December ruling invalid when NLRB member William Emanuel, a Trump appointee, was found to have a conflict of interest. Emanuel’s former law firm represented a staffing agency involved in the 2015 NLRB case.

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