Antitrust Law Daily Wrap Up, FRANCHSING & DISTRIBUTION NEWS: Ex-employees take on McDonald’s over alleged harassment by franchisee, (Jan 23, 2015)

A group of former employees have sued McDonald’s Corporation—along with a franchisee that operates stores in South Boston and Clarksville, Virginia—over what they called “rampant and racial and sexual harassment” at the hands of the highest-level supervisors, and a plan that reduced the number of African-American employees so they could be replaced by white workers instead.

According to a complaint filed in the federal district court in Danville, Virginia, franchisee Soweva Co.’s owner purportedly explained to workers that “the ratio was off in each of the stores,” which had predominately African-American workforces, and he just wanted the “ratio to be equal” (Betts v. McDonald’s Corporation, January 22, 2015).The lawsuit comes a month after the National Labor Relations Board named the fast-food giant as a joint employer in a batch of unfair labor practice complaints filed against franchisees for actions they purportedly took in the face of widespread protests over low wages and other working conditions.

The plaintiffs include nine African-American and one Hispanic former employee who are seeking relief for the discrimination and harassment they endured from McDonald’s, Soweva Co., and its owner. Several of them, per training instructions given by McDonald's, called the giant fast food corporation to complain about their discharge and the “blatant racial discrimination,” but McDonald’s did nothing, the plaintiffs allege.

Harassment. According to the complaint, restaurant supervisors allegedly demeaned African-American workers and frequently complained, “there are too many black people in the store.” Supervisors called African-American and Hispanic workers ethnic slurs. Among other things, supervisors also disciplined African-American employees for rule infractions that were forgiven when committed by their white counterparts, inappropriately touched female workers on their legs and buttocks, sent female employees sexual pictures, and solicited sexual relations from female employees.

McDonald’s as joint employer. The 41-page complaint names McDonald’s Corporation and McDonalds USA, LLC, as defendants, citing a series of allegations that would support the notion that it is a joint employer. According to the complaint, there are more than 15,500 McDonald’s restaurants operating in the United States and Canada; about 90 percent of those in the United States operate as a franchise restaurant, with the rest owned and operated directly by McDonald’s Corporate. “McDonald’s Corporate has control over nearly every aspect of its franchised restaurants’ operations,” the plaintiffs assert.

Among the list of things that purportedly put McDonald’s Corporate in control of its franchisees are business manuals that contain “detailed instructions for franchisees in areas including operations procedures, bookkeeping and accounting procedures, business practices and policies, personnel management.” The plaintiffs also cite, among many others, provisions in the franchise agreement that requires Soweva to enroll managerial employees for training at “Hamburger University,” or any other training center designated by McDonald’s Corporate.

The Operations and Training Manual (OTM) purportedly tells employees to report incidents of unlawful discrimination and harassment with the promise that “McDonald's will investigate any report thoroughly, with sensitivity towards confidentiality. If the report has merit, McDonald's will take corrective action, including, but not limited to, disciplinary action against the offender ranging from a warning to termination.” An “our policies” manual that McDonald’s gives to franchise restaurants also tells employees that discrimination and harassment are prohibited, and failure to follow rules will result in the risk of discipline.

The case is No. 4:15-cv-00002-JLK.

Attorneys: Narendra K. Ghosh and Paul E. Smith (Patterson Harkavy LLP) and Virginia Diamond (Ashcraft & Gerel, LLP) for Willie Betts, Crystal Boyd, Christina Chadwick, Alkeisha J. Lea, Pamela M. Marable, Kirk Morris, Sheina Robinson, Katrina D. Stanfield, Brian M. Tucker, and Tamika King Williams.

Companies: McDonald’s Corporation; McDonalds’s USA, LLC; Soweva Co.

News: FranchisingDistribution VirginiaNews