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McDonald's: Regulator says it's a 'joint employer'

By Associated Press

POSTED:
LAST UPDATED: 11:49 a.m. HST, Jul 29, 2014


NEW YORK >> McDonald's is finding itself under intensifying pressure for the pay and other labor practices at its U.S. restaurants.

The National Labor Relations Board said Tuesday that the world's biggest hamburger chain could be named as a joint employer in several complaints by worker groups at restaurants owned by franchisees. The decision is pivotal because it could expose McDonald's Corp. to liability for a wide range of working conditions in those locations.

It also comes as protests for higher pay have captured national attention, with labor groups calling for pay of $15 an hour and the right to unionize. Organizers had been pushing to get McDonald's named as a joint employer at franchised restaurants, a move intended to give them a more centralized and powerful target.

"There's really no doubt who's in charge," said Micah Wissinger, an attorney who brought a case on behalf of McDonald's workers in New York City.

McDonald's and other chains including Burger King and Yum, which owns Taco Bell, KFC and Pizza Hut, have repeatedly sought to distance themselves from the pay protests by saying they don't determine wages at its franchised locations.

In the U.S., the vast majority of McDonald's more than 14,000 restaurants are owned and operated by franchisees. The same is true for many other fast-food chains.

Heather Smedstad, senior vice president of human resources for McDonald's USA, said in a phone interview that the company has never been determined to be a joint employer in the past and that it would fight the decision by the labor board.

"This is such a radical departure that it should be a concern to business men and women across the country," she said.

Still, labor organizers say McDonald's should be held accountable because the company has so much control in setting the terms of operations in its restaurants, such as what menus, supplies, uniforms and training materials are used.

In March, lawsuits on behalf of McDonald's workers in three states also detailed use of company software that monitors the ratio of labor costs as a percentage of sales at its restaurants. When that ratio climbs above a target, workers were forced to wait around before they could clock in, according to the suits.

In a call arranged by labor organizers, longtime McDonald's worker Richard Eiker also recounted how McDonald's regularly sends representatives to check up on how franchisees are running restaurants, including by standing outside the drive-thru to time how quickly cars go through.

"Managers go crazy when corporate comes in for these inspections," he said, adding that restaurants are constantly told to keep costs down.

The National Labor Relations Board said it has had 181 cases involving McDonald's filed since 2012. For the 43 cases that were found to have merit, the board said McDonald's or its franchisees can named as respondents. The other cases were found to have no merit or are still pending.

The International Franchise Association, which represents franchisees, has opposed the identification of McDonald's as a joint employer. The group also recently filed a lawsuit in Seattle challenging whether fast-food and other franchisees should be treated like large employers, thus subjecting them to a new $15 minimum wage at an earlier date than smaller businesses.

"If franchisors are joint employers with their franchisees, these thousands of small business owners would lose control of the operations and equity they worked so hard to build," the International Franchise Association said in a statement.






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