McDonald’s wide-ranging labor case won’t reach a conclusion just yet. A National Labor Relations Board administrative law judge rejected the company’s proposed settlement Tuesday in a case determining whether or not McDonald’s should be held accountable for alleged labor-law violations by franchisees across the country.
McDonald’s was looking to avoid a ruling that would have labeled it a so-called “joint employer” of workers at its franchise locations, and thus liable when franchisees violate federal labor law that breached union agreements. Franchise employees are claiming they were fired for participating in a national movement for union rights and $15 wages.
NLRB Administrative Law Judge Lauren Esposito in New York said the company’s March settlement proposal was missing critical information and would not bring an end to the case. McDonald’s had agreed to pay between $20–$50,000 in the settlement to individual workers.
“The NLRB General Counsel, McDonald’s USA, and various franchisees negotiated a settlement agreement that is fair, reasonable, and provides the opportunity now for full and complete relief to all current and former franchisee employees affected by the litigation,” McDonald’s said in a statement to Bloomberg, adding that it’s still deciding whether to appeal. It can be appealed by the members of the Republican-majority NLRB.
Fight for $15 is a union-backed advocacy group that organized the protests. McDonald’s case dates back to 2012 when Fight for $15 filed dozens of claims on behalf of McDonald’s workers. The trial began in 2015 and was put on hold so NLRB General Counsel Peter Robb could pursue settlement talks with McDdnald’s.
Mary Joyce Carlson, a lawyer with Fight for $15, told Reuters McDonald’s and the government agreed to a “sham” settlement "to hand the company a get-out-of-jail-free card for illegally harassing, surveilling, and firing minimum-wage workers who joined together and spoke out for a better life."
The case continues the “joint-employer” saga. In late February, the NLRB unanimously vacated its December Hy-Brand joint employer ruling, meaning restaurant operators around the nation would once again be subject to the 2015 Browning-Ferris test for determining joint employment. The NLRB did so following an inspector general report that said board member Bill Emanuel should have recused himself from voting in the case.
The ruling reverted to the Obama-era precedent stemming from the Hy-Brand Industrial Contractors, Ltd. decision, which dramatically narrowed the situations where the joint employer doctrine could be applied. Daniel Handman, a partner at Hirschfeld Kraemer LLP, explained it at such: “Before 2015, the board required employees seeking to invoke the joint employer doctrine that each employer ‘directly and immediately’ exercised control over the terms and conditions of employment of the workers at issue. That standard proved tricky for employees and their advocates, as decisions involving pay and discipline were often much more indirect than the standard required.”
In 2015, the Obama board decided Browning-Ferris Industries, a decision which substantially reduced the burden for employees. Rather than requiring proof of direct and immediate control, the Obama board allowed for “indirect” control over wages and other terms of employment. More importantly, the board found that actual control was not required; it was sufficient if a separate company reserved itself the right to control terms of employment.”
In December that changed when a party-line 3-2 decision found that in all future and pending cases, the board would only consider two companies to be joint employers if there is proof that one entity has actually exercised control over “essential employment terms” of another entity’s employees. No longer would proof of indirect control or the potential exercise of control suffice, as it did under Browning-Ferris.
But the February change made it so corporations would once again find themselves potentially liable for workplace law violations at their franchises, despite the fact many are independent or privately owned.
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