In a surprising victory for logic and basic ethics, the National Labor Relations Board has ruled that McDonald's is considered a "joint employer" with the franchise locations operating under its name. Hold on, I have to go spend forever laughing vindictively.
What this does, ultimately, is give labor movements a legal opportunity to go at fast food companies directly for abuses, and to collectively bargain for higher pay. Since 2012, 181 cases have been filed against McDonald's. 43 of them were found to have merit, which means that in those cases, the NLRB has ruled that McDonald's will be named as a respondent if a settlement isn't reached between the company and the plaintiffs. It also potentially opens the door for similar wage/abuse lawsuits against other franchised companies, unless the NLRB rules that McDonald's is a special case. Make no mistake: if this ruling stands, it could (and probably will) have a huge effect on franchising and labor relations in this country.
We've known a decision was coming on this case for a while. McDonald's has long maintained that it had nothing to with anything its franchisees did, but that assertion doesn't really hold up when one considers the abnormal level of control McDonald's asserts over its franchises. In addition to McDonald's practice of owning the land upon which its franchises operate and then charging them rent,* they apparently also send people to check on their franchises by doing things like manually timing how long it takes people to get through the drive-thru. Another example concerns one of the lawsuits against the company earlier this year:
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 one of the suits.
While it's true that McDonald's doesn't directly set wages, the unusual amount of control they assert over their franchises means that profit margins are often so thin their franchisees can't maintain profitability unless they shortchange their own workers. Thus, McDonald's gets to keep wages low while claiming they couldn't possibly have any control over what their franchisees do, ignoring that while they can't make their franchisees pay their employees more, they can (and do) prevent them from being able to do so.
McDonald's, of course, plans to fight the decision. In the meantime, allow me to express my sympathies to the company:
It's difficult to overstate how much I'm enjoying this ruling.
* They're not the only company that does this, actually. Chik-Fil-A does it too, but with a couple crucial differences: first, they charge only $5,000 as an initial franchising fee (low for the industry; KFC, for example, charges $25,000 and will only sell to potential franchisees with a net worth of at least $1 million), and second, they charge a percentage of sales and pre-tax profit rather than a flat rate. As that article makes clear, they're still creepy, zealotic assholes, though.
Image via AP.