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Judge Chastises McDonald’s for Playing Games in ‘Joint Employer’ Case

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NEW YORK - A federal judge last Friday accused McDonald's Corporation of "playing games" in order to avoid complying with a subpoena issued by the National Labor Relations Boards. She then gave the franchisor 30 days to hand over thousands of employee emails the federal agency is requesting to determine if McDonald's should be held liable for labor violations by its franchisees.

The NLRB denied McDonald's request for a special appeal last August on claims that it is a "joint employer" with its franchisees. The company and its franchisees asked for a "bill of particulars" explaining the facts that the general counsel intended to rely upon in showing the franchisor was a joint employer. McDonald's had argued that without the pertinent information of how the general counsel intended to present its case in evaluating whether there was a joint employer relationship, it would be denied due process. McDonald's asked the Administrative Law Judge to strike the SEIU's allegations and dismiss its 2014 complaint.

The National Labor Relations Board filed 13 cases against McDonald's Corp. (NYSE:MCD) and its franchisees in late December 2014, alleging they violated the rights of employees, who worked at McDonald's restaurants at various locations across the country. The complaints stated that McDonald's and its store owners made statements and took actions against fast food workers for engaging in activities that aimed to improve their wages and working conditions. They accuse the parties of interfering with nationwide protests organized by unions over the past two years over their terms and conditions of employment.

Regarding the subpoenas, McDonald's has argued that the emails are irrelevant and costly to produce. In a recent court filing, it stated it had already spent more than $1 million on 160,000 pages of documents in response to the subpoena, even though the company says it will owe no more than about $50,000 if it is found liable for alleged labor violations at 29 franchises in five states.

Reuters reported that at the hearing Friday morning, U.S. District Judge Colleen McMahon in Manhattan scolded the company's attorneys, "You're not even close to proving that the burden on McDonald's would outweigh the relevance" of the documents.

An earlier Reuters report told, "While McDonald's is not facing a large payout to workers, the case is of critical importance to the fast food giant and other franchisors, since a finding of joint employment would force such companies to bargain with unions and could impact the very basis of the franchise model." One McDonald's attorneys stated, "The General Counsel's subpoena to McDonald's is, we believe, one of the most burdensome in the history of the agency."

Reuters also said Judge McMahon rejected the NLRB's demand for records from several McDonald's executives and information on the company's response to a union-backed nationwide protest movement calling for a $15 minimum wage. When the agency's attorney said an effort by the company to stifle the campaign could be proof of joint employment, McMahon said "that's a stretch."

The case, NLRB v McDonald's USA LLC, filed in New York District Court, Southern District, scheduled to go to trial in January, is expected to have a major impact on U.S. franchisors.

McDonald's is not the first NLRB case that the franchise community has been watching. Last August the federal agency handed down a decision in Browning-Ferris, a non-franchised waste management business that was ruled to be a joint employer with its subcontractor staffing agency that provided temporary workers.

The board's decision basically refines NLRB's traditional standard saying, "When two entities, directly or indirectly, share the ability to control the terms of employment of workers they are 'joint employers.'" In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the NLRB will consider whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so.


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About Janet Sparks

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Janet Sparks is the former publisher of the Continental Franchise Review, an industry newsletter that covered the franchise community for over 30 years. She has also been a columnist for a leading franchise magazine for the past 13 years. Today she is an independent journalist who engages in investigative reporting, tackling complex issues that impact the franchise industry.

Janet can be reached at jsparks@bluemaumau.org or at 303-799-7398.