NLRB Charges Against McDonald’s Put Focus on HR

By Allen Smith Dec 22, 2014
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The National Labor Relations Board’s (NLRB’s) 78 charges filed against McDonald’s USA and McDonald’s franchisees on Dec. 19, 2014, are particularly relevant to HR professionals at franchisors and HR consultants, Michael Lotito, an attorney at Littler, told SHRM Online.

The charges maintain that the franchisees and their franchisor acted as joint employers and took retaliatory discipline against employees—including reductions in hours, discharges and other coercive conduct—in response to the employees engaging in activities aimed at improving their wages and working conditions during Fight for $15 protests.

“HR at franchisors have to think about what kind of support they provide franchisees and whether that will embroil the franchisor and franchisee in a joint employment relationship,” Lotito remarked.

HR consultants may have an opportunity to help provide tips to franchisees about wage and hour laws and labor law if franchisors cut back on their help for franchisees because of the charges. Franchisees typically don’t have their own HR professionals on staff or in-house or external legal support, he noted.

The NLRB’s treatment of franchisors and franchisees as joint employers goes against decades of courts treating franchisors and franchisees as separate entities, Lotito added.

McDonald’s response to union and protected concerted activity allegedly has included threats, surveillance, interrogations and overbroad restrictions on communicating with union representatives or with other employees about unions and the employees’ terms and conditions of employment.

Corporate Campaign

The Service Employees International Union (SEIU) is behind the Fight for $15 movement, which is “just Justice for Janitors with another sports coat on,” Lotito remarked. The union is seeking not only to organize corporate stores, but to get franchisees to agree to neutrality or card check, he said. With a neutrality agreement, a company typically agrees to recognize a union if union authorization cards are signed by more than half the unit employees—known as “card check”—rather than insist on a union election if enough cards are signed for there to be an election.

Similar campaigns are now being waged in the home health worker industry, and this is an additional reason for HR to follow these developments, as they demonstrate the force of a union campaign.

“Union bosses have launched a corporate campaign against McDonald’s in order to bully it into handing over its workers. Today’s announcement hands union organizers a powerful weapon to use against employers, many of which are small businesses, that refuse to give into union officials’ demands,” said Patrick Semmens, vice president of the National Right to Work Legal Defense Foundation.

Once employees vote to unionize, which would be made easier through card check, there is a steady flow of dues. In addition, since turnover is high in the fast food industry, unions stand to benefit from higher initiation fees. This could be a “huge cash cow” for organized labor, Lotito said, which explains the reason SEIU has poured millions into the Fight for $15 drive.

“The [NLRB] has repeatedly indicated that it would look to expand the scope of its jurisdiction,” added Don Schroeder, an attorney at Mintz Levin in Boston. “So it does not come as a shock that the board is prepared to adopt a more liberal definition of the joint employer doctrine.”

McDonald’s Reaction

“The NLRB’s actions today improperly and dramatically strike at the heart of the franchise system—a system that creates economic opportunity, jobs and income for thousands of business owners and their employees across the country,” McDonald’s said in a statement.

“McDonald’s is disappointed with the board’s decision to overreach and move forward with these charges and will contest the joint employer allegation as well as the unfair labor practice (ULP) charges in the proper forums,” it added.

“These allegations are driven in large part by a two-year, union-financed campaign that has targeted the McDonald’s brand and impacted McDonald’s restaurants. McDonald’s has taken the appropriate measures, working properly with its independent franchisees, to defend itself against that attack on its business.”

Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.

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