The last time you ordered some Chicken McNuggets or a Big Mac, was it a McDonald's employee who took your order, made the food and handed it to you? The National Labor Relations Board just handed down a ruling that decries that most likely, it was not a McDonald's employee, but an employee who works for a McDonald's franchise.
Over 90 percent of McDonald's restaurants are franchises--that is owned by people other than McDonald's corporate entity. Since 2012 McDonald's has been in a court battle to determine whether it is a "joint employer" along with the franchise owners.
In 2012, a few McDonald's franchise employees claimed they were punished for pro-union activities. This is patently illegal. The question was, is McDonald's liable or strictly the franchise owners? If McDonald's is a joint employer, then they can be held responsible for everything at the employee level--from missed overtime payments to sexual harassment.
The National Labor Relations Board just handed down a ruling declaring that McDonald's was not a joint employer and allowing the franchise model to continue.
What is a joint-employer?
A joint employer, under the proposed Department of Labor guidelines, is one where both the franchise owner and the corporate entity have the power to
- hire or fire the employee;
- supervise and control the employee's work schedules or conditions of employment;
- determine the employee's rate and method of payment; and
- maintain the employee's employment records.
This is a change from the Obama era, where economic dependence was included in the decision calculus. The Obama administration supported the policy of establishing McDonald's and other corporate entities as joint employers, while the Trump administration reversed course. This NLRB decision was split two to one along party lines.
This is not just about McDonald's
Chances are this joint employer ruling affects everything from how you buy a house to who you hire to clean that house. Fast food restaurants are not the only people who operate in the franchise model.
People buy franchises precisely because they want to be business owners and make those decisions. While it's nice to have a company's big pockets at stake, rather than just your own, if the franchise owner becomes liable for everything regarding employees, they are likely to seize control of everything as well. If they have control of everything, there is no point in franchising.
This ruling is not only pro-big business but pro-small business owners, allowing them independence in how they run their franchised stores.