Not Lovin’ It: NLRB General Counsel Authorizes Complaints Against McDonald’s as a Joint Employer with Franchisees

On July 29, 2014, the General Counsel of the National Labor Relations Board (NLRB or Board), Richard Griffin, authorized NLRB Regional Directors to file unfair labor practice complaints against McDonald’s as an alleged “joint employer” alongside its local franchisees. The decision stems from 181 complaints the Board has received since November 2012, which allege unfair labor practices by franchisees relating to worker protests. The decision authorizes 43 of those complaints to be brought against McDonald’s and dismissed 68 of the complaints. Sixty-four of the complaints are still outstanding.

The complaints at issue center on protests by fast food workers and alleged unfair labor practices by their employers. The protests reportedly have been organized and funded by the Service Employees International Union. They have focused mainly on increasing wages, a practice that is generally considered protected concerted activity under the National Labor Relations Act (NLRA). Until the July 29 decision, however, the cases appeared to only affect each individual McDonald’s franchisee. Including McDonald’s as a “joint employer” significantly broadens the reach that these cases may have.

It is important to note that the General Counsel’s directive is not the same as a binding Board ruling. The next phase will unfold before administrative law judges hearing the employees’ claims in the various regional offices of the NLRB. If the administrative law judges determine that unfair labor practices occurred, and rule against McDonald’s on the joint-employer issue, the company is likely to appeal to the NLRB in Washington. And McDonald’s has said that it will appeal any adverse decisions from there through the federal appellate courts as well.

While this case focuses only on unfair labor practices, if the Board were to agree with the General Counsel and conclude that franchises like McDonald’s are joint employers for union election and bargaining purposes, it could be a boon for unions and give them more options for organizing. Instead of looking to represent a small group of workers at restaurants owned by a single franchisee, for example, a union might seek to represent a unit composed of a larger group of employees from restaurants operated by multiple franchisees or even nationwide.

The General Counsel’s directive could have far reaching effects — not just on the fast-food industry but also on other franchisors in other industries. While we do not know the full basis for the General Counsel’s decision, it is likely focused on the alleged level of control that McDonald’s exerts over its franchisees. And while McDonald’s has reportedly been among the more controlling franchisors, the General Counsel’s analysis could apply to other franchise businesses that require franchisees to meet detailed standards involving employees.

We will continue to monitor developments in this area. Please contact Michael L. Stevens with questions, or the Arent Fox professional who handles your matters.