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McDonald's/NLRB case ruling a big win for franchising companies

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December 13, 2019

In what might be considered a major win for franchising companies Thursday, the National Labor Relations Board ruled that McDonald's should not be held for its franchisees' labor practices, closing a years-long union case that many in restaurant franchising have watched for implications across the industry. 

The NLRB, which enforces federal labor law, stipulated that a federal law judge should approve a settlement reached earlier between McDonald's, its franchisees and workers who alleged violations of labor-law. Its likely that the board's ruling will be appealed, according to NPR. 

Case history: 

The 2015 litigation involved the Service Employees International Unio, which accused McDonald's and its franchisees of illegally retaliating against employees of the chain who supported the Fight For $15 labor movement, by assigning those workers tougher duties on the job or fewer hours. Initially, the prosecutor in the case wanted the judge to consider McDonald's a "joint employer" of franchisees in the complaint, meaning the company would also face the labor law violations its franchisees were accused of violating.

Last year a settlement was proposed, but rejected, just before the three year-long trial concluded. This week, an NRLB panel overruled that and instructed the judge to approve that settlement. 

Reaction: 

The union and Fight For $15 organization told NPR that they would appeal the ruling.

"Trump Administration agencies, including the NLRB, are making decisions in the interest of corporations like McDonald's and not the American people or the law. ... McDonald's is walking away with a get-out-of-jail-free card after illegally retaliating against low-paid workers who were fighting to be paid enough to feed their families."

McDonald's, however, applauded the panel's action, according to NPR. 

"The settlement ... allows our franchisees and their employees to move forward, and resolves all matters without any admission of wrongdoing. Additionally, current and former franchisee employees involved in the proceedings can now receive long overdue satisfaction of their claims."
The settlement directs McDonald's franchisees to set up a $250,000 fund to pay out workers involved in the case.