Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: McDonald’s vows fight against NLRB’s ‘joint employer’ decision, (Jul 30, 2014)

By Greg Hammond, J.D.

McDonald’s, USA, LLC is disputing the National Labor Relation Board’s (NLRB) decision, allowing the fast food franchisor to be named joint employer, alongside its franchisees, in various unfair labor practice complaints. The company’s statement came after the NLRB issued its own news release, declaring that complaints will be filed against McDonald’s and its franchisees if settlements are not reached with various restaurant employees.

“This decision to allow unfair labor practice complaints to allege that McDonald’s is a joint employer with its franchisees is wrong,” McDonald’s Senior Vice President Heather Smedstad stated. “McDonald’s will contest this allegation in the appropriate forum.”

According to McDonald’s, “this decision changes the rules for thousands of small businesses, and goes against decades of established law regarding the franchise model in the United States. McDonald’s, as well as every other company involved in franchising, relies on these existing rules to run successful businesses as part of a system that every day creates significant employment, entrepreneurial and economic opportunities across the country.”

The NLRB’s General Counsel received 181 cases involving McDonald’s since November 2012. While 64 cases are still pending investigation, 43 cases have been found to have merit with regard to unfair labor practices. If settlement is not reached in all 43 cases, complaints will issue against McDonald’s and its franchisees.

“McDonald’s does not direct or co-determine the hiring, termination, wages, hours, or any other essential terms and conditions of employment of our franchisees’ employees, which are the well-established criteria governing the definition of a ‘joint employer,’” the company stated.

The burger giant received support from the International Franchise Association (IFA), the world’s largest organization representing franchising worldwide.

“The NLRB’s Division of Advice recommendation that franchisors and franchisees be designated as joint employers is both wrong and unjustified,” said IFA President & CEO Steve Caldeira in a July 29 statement. “This legal opinion would upend years of federal and state legal precedent and threaten the sanctity of hundreds of thousands of contracts between franchisees and franchisors, a bedrock principle of the rule of law.”

“Ruling that franchises are joint-employers will be a devastating blow to franchise businesses and the franchise model,” he continued. “Franchise job growth and new business formation have outpaced non-franchised growth for the last five years but will undoubtedly come to a screeching halt if this decision is affirmed by the NLRB’s New York Regional Office.”

Companies: McDonald’s, USA, LLC; International Franchise Association

News: FranchisingDistribution