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Spangenberg Shibley & Liber LLP | Jun 18, 2015

NLRB ruling could affect liability of fast food franchisors

Categories: Business Litigation

A recent National Labor Relations Board (“NLRB”) decision regarding McDonald’s employees could have a serious impact on not just McDonald’s, but franchisors and franchisees more generally. The general counsel of the NLRB recently authorized the filing of complaints jointly against McDonald’s Corp, and their franchisees, who directly employ some 90% of McDonald's restaurant workers.

With fast food employees - including some employed at McDonald's restaurants - recently taking to single day “strikes” and other organizational techniques to bargain for higher wages and improved working conditions, companies like McDonald’s that operate largely on a franchise model have generally been content to let their franchisees take punitive action against those attempting to organize. McDonald's has generally asserted that they could not be held responsible legally for those actions. This decision could hamper McDonald’s and other franchisors ability to disclaim responsibility for the labor actions of their franchise owners.

McDonald's restaurant employees have repeatedly filed unfair labor practice charges with the NLRB claiming that the actions taken by their employers – in firing or otherwise disciplining them for their attempts to organize – were unlawful. Prior to this ruling, however, there was no chance of those unfair practices being imputed to McDonald’s Corp. Now they may be. The GC's decision has the potential to effect not only the adjudication of employee unfair labor practice charges but has, at least theoretically, the potential to allow for union bargaining units to organize across restaurants and across franchisees.

While the only “new” liability created here is technically with the franchisor, franchisees should be cognizant of the fact that their labor actions may be imputed to their franchisor going forward and may be well served to communicate with their franchisor regarding these matters before taking employment actions against organizers.

Photo courtesy of The Guardian: US fast-food workers strike over low wages in nationwide protests