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    McDonald's Settles Wage Theft Suit for $26 Million

  • The legal battle dates back to 2013.

    McDonald's
    McDonald's has faced its share of legal troubles this year.

    McDonald’s settled a multi-year legal battle Monday by agreeing to pay $26 million to California workers. The settlement—the highest for McDonald’s over wage left in the U.S.—stems from claims made by four workers on behalf of roughly 38,000 cooks and cashiers in corporate stores across the state. The suit alleged McDonald’s withheld pay by breaking laws around overtime, meal and rest breaks, uniform cleaning, and other points.

    McDonald’s also agreed in the settlement to abide by certain injunctive provisions. According to a motion for preliminary approval of the settlements, these were “critical to plaintiffs.”

    It included periodic training of employees at company-run California locations on their rights, such as receiving 10-minute breaks roughly every two hours and getting new uniforms at new cost to replace damaged ones.

    Others:

    • Creating a mechanism for paying the one-hour wage premium that must be paid to every crew member each day McDonald’s fails to provide them a full, timely full meal period or rest break
    • Permitting crew members to leave the restaurant during their meal periods without restriction or threat of discipline
    • Maintaining detailed electronic time records that accurately track the time and duration of each meal period and rest break
    • No longer making workers take rest breaks as soon as their shift starts (or ends) out of convenience to the store rather than the worker (California law dictates the break should be as close to the mid-point as possible).

    The class action was first filed in California in 2013 by Los Angeles McDonald’s employee Maria Sanchez. Three other workers subsequently signed on, with wage theft violations allegedly dating back as far as 2009. Seven years of litigation in trial and appellate courts and extended settlement negotiations followed.

    The lead complaint was that McDonald’s failed to pay overtime to employees who worked more than eight hours during a 24-hour period, which violated state law, the suit claimed.

    McDonald’s told CNN Business in a statement Monday, “While we continue to believe our employment practices comply with the California Labor Code, we have decided to resolve this lawsuit.”

    It added, “we take our responsibility as an employer seriously and are deeply committed to the fair treatment of all of our employees.” McDonalds said the company “continuously” rolls out trainings and offers resources at corporate locations to promote compliance with wage and hour laws.

    The Fight for $15 and a Union released commentary Monday that includes statements from some employees. Rosario Mercado, who works at a corporate McDonald’s in Los Angeles, said the company “cheated us out of tens of millions.”

    “We’re going to keep fighting until the day comes when we don’t have to sue McDonald’s to get the company to treat us right and pay us fair wages, provide a safe workplace free of sexual harassment and violence and respect our right to a union,” she said.

    The organization accused McDonald’s of structuring its timekeeping so all hours worked would be attributed to the day the shift started, not when the work was actually performed.

    “So, for example, if an employee worked six hours from 8 p.m.–2 a.m., and then the next day from 2–8 p.m., she’d be working 12 hours within a 24-hour time period—but McDonald’s would skirt overtime laws by attributing the hours to two separate days,” the organization said.

    It added that McDonald’s required workers to clean and iron uniforms without pay or reimbursement, “even as they worked under dirty, smoky and greasy conditions.”

    McDonald’s has faced wage theft accusations previously. In 2014, employees in Michigan and New York filed class-action suits. The chain said then it was “committed to undertaking a comprehensive investigation of the allegations and will take any necessary actions.”

    Two years later, McDonald’s agreed to pay $3.75 million to settle a separate wage theft class action suit in California.

    Last week, the company agreed to pay New Zealand employees for miscalculating holiday wages, as much as $29 million.

    According to Monday’s preliminary approval of the settlement, the provisions “are designed to protect current and future crew members in McDonald’s corporate-owned restaurants in California from future violations of their wage-and-hour rights under the Labor Code and Wage Orders, while providing fast-food employers throughout the State with a model for similar workplace protections.”

    Per the Fight for $15, workers planned to rally at a LA McDonald’s Monday afternoon.

    "We've won our hard-earned pay back and forced McDonald's to change its illegal wage-theft practices, but our fight is far from over," added Leonidas Davila, who works at a corporate-owned McDonald’s restaurant in Los Angeles, in a statement through the organization. "We want the company's new CEO to hear us loud and clear: we will not stop joining together and speaking out until we win our union."

    McDonald’s former chief executive, Steve Easterbrook, left the company in November after he “demonstrated poor judgment involving a recent consensual relationship with an employee.”

    Chris Kempczinski, previously head of McDonald’s U.S. business, stepped into the president and CEO role. He also joined the chain’s board.

    Shortly after, it was also announced that David Fairhurst, McDonald’s global chief people officer, was departing.

    McDonald’s employed about 210,000 people globally at the end of 2018. About 95 percent of the brand’s U.S. stores are run by franchisees.

    The chain has faced legal battles in 2019. Earlier this month, a former employee filed a class action sexual harassment suit against the company with the aid of the American Civil Liberties Union and the Time’s Up Legal Defense fund. It alleged McDonald’s “creates and permits a toxic work culture,” and is seeking at least $5 million in damages.

    McDonald’s responded to the suit, per CNN Business, by saying it “is demonstrating its continued commitment to this issue through the implementation of Safe and Respectful Workplace Training in 100 percent of our corporate-owned restaurants."

    The company added franchise groups, which aren’t required to follow these corporate policies, were committed as well, and are training staff according to corporate regulations.

    According to Fight for $15, workers have filed more than 50 complains and suits against McDonald’s in the past three years.

    This past month, McDonald’s started trainings staff on how to mitigate violence, report harassment, and reduce unconscious bias, the company said.

    In May, after 25 sexual harassment changes and lawsuits surfaced, the company responded with a letter to an inquiry from U.S. Senator Tammy Duckworth over the fast-food chain’s handling of harassment complaints. Reviewed by Bloomberg, Easterbrook said McDonald’s was training employees to deal with harassment, and starting a hotline for victims. He said the company was committed “to ensuring a harassment and bias-free workplace.”

    “We have enhanced our policy so that it more clearly informs employees of their rights, more clearly defines sexual harassment, discrimination and retaliation, and provides examples of what unacceptable behavior looks like,” Easterbrook wrote, per Bloomberg.

    McDonald’s also started working with anti-abuse organization RAINN in 2018, according to the letter, on how to prevent misconduct. Easterbrook said 90 percent of operators and general managers have taken the new training course. And it will offer training to other crew members on harassment, unconscious bias, and workplace safety.

    Easterbrook said the moves are “a clear message that we are committed to creating and sustaining a culture of trust where employees feel safe, valued and respected.”