In 2014, the National Labor Relations Board’s (“NLRB”) Office of the General Counsel issued 13 complaints involving 78 charges against McDonald’s USA, LLC and multiple McDonald’s franchisees all over the country. The complaints alleged a variety of unfair labor practices by the franchisees and McDonald’s USA as a joint employer, including taking unlawful actions against employees for “participating in nationwide fast food worker protests about their terms and conditions of employment,” namely the Fight for $15 campaign. The parties have been engaged in an ongoing trial since 2015.
From the start, the case has drawn eyeballs not just because it involves McDonald’s, but also because a finding of joint employment between one of the world’s largest franchisors and franchisees had the possibility of upsetting the franchisor-franchisee relationship, which has been used to great effect in the United States since the late 1800s.
In January of 2018, the court granted a 60-day stay in the case, allowing for the pursuit of settlement in light of the Board’s overturning of Browning-Ferris Industries, 362 NLRB No. 186 (2015) (“Browning-Ferris”). The Browning-Ferris decision, decided during the Obama presidency, had significantly relaxed the test for finding joint employment, requiring only a showing of “indirect control” or the ability to exert such control. This ignored the realities of franchising agreements and real-world business ventures in that franchisors want the ultimate say in decisions affecting their brands by maintaining some level of control in that realm but rarely, if ever, have control over day-to-day labor management decisions.
Thankfully, Browning-Ferris, a huge setback in this area for franchises and business ventures of all kinds, was overturned in Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co., 365 NLRB No. 156 (2017) (“Hy-Brand”), which returned the Board to its decades-long joint-employer test requiring a showing of “direct and immediate control” of the terms and conditions of employment, which we reported on here. However, that decision was vacated in February after it was deemed that NLRB member Bill Emanuel should have recused himself, returning the test to the vaguer Browning-Ferris standard of indirect control, as we reported here. Additionally, it is unclear if there are enough votes on the Board as currently comprised to once again overturn Browning-Ferris.
Instead of resuming trial after the Hy-Brand decision was vacated, the NLRB General Counsel continued to seek settlement. On March 19, 2018, McDonald’s proposed a settlement that would resolve all matters without requiring McDonald’s to admit to any wrongdoing. However, there appear to be several objections to this settlement, as the charging parties would like McDonald’s to “take responsibility.”
A hearing regarding approval of the proposed Settlement Agreements is scheduled for today, April 5, 2018.
COUNSEL TO MANAGEMENT:
If this case does not settle and instead returns to trial, it could have serious implications on joint employment. If the settlement is finalized, in the short term, the untenable Browning-Ferris standard will continue to be applied to all companies, and worker centers and unions will likely continue to target employers by continuing to manipulate petitioned-for units in elections, broadening their scope in unfair labor practices, and leveraging franchises by breaking them down with this “hammer.” Obviously, it remains a threat. We will keep you informed as the McDonald’s settlement proceeds. If you have any questions or concerns regarding the NLRB and unfair labor practices or joint employer liability, please do not hesitate to contact the experts at The Saqui Law Group.