Portside

In a significant victory for fast-food demonstrators, the Obama administration filed 13 legal complaints on Friday against McDonald’s USA, LLC, alleging 78 instances in which it violated federal labor law by punishing workers for taking part in fast-food protests.

This is the first time the fast-food giant has been held even partly responsible for labor violations allegedly committed by any of its 2,500 independent owners or franchisees. The franchisees operate their restaurants under contracts with McDonald’s that explicitly free the company of any responsibility for hiring, firing and supervising restaurant employees.

The complaints allege that the company and its franchisees retaliated against protesters by reducing their hours or firing them. It’s illegal to retaliate against any worker for “concerted activities” to protest workplace conditions, even when no union organizing takes place — which was almost always the case in the fast-food protests.

The action, undertaken by the National Labor Relations Board’s general counsel, will be met immediately by a high-spending business campaign to counter it through litigation, lobbying and public relations. The International Franchise Association, the most active Big Business lobby opposing the complaints, has already retained lobbyists at the law firm Akin Gump Strauss Hauer & Feld, including Ed Pagano, a former Senate liaison and deputy assistant to President Barack Obama for legislative affairs and longtime staffer for Democratic Sen. Pat Leahy of Vermont.
 

NLRB general counsel Richard Griffin, who acts as a sort of prosecutor, may issue legal complaints against any business, including a franchisee. In July, Griffin drew considerable consternation from McDonald’s and other franchisers when he determined that the McDonald’s corporation could be named a “joint employer” in such complaints.

Griffin did just that on Friday, alleging in 13 complaints against franchisees around the country that McDonald’s jointly employed workers against whom franchisees unlawfully retaliated for protesting working conditions — chiefly low wages. That’s a first for the NLRB and makes McDonald’s potentially liable, financially, for any back pay that an administrative judge or the NLRB may order, and potentially responsible, legally, for any failure to carry out an order to reinstate an employee. (The NLRB is unable by statute to impose fines or require payment of compensatory or punitive damages.) By questioning McDonald’s Corp.’s contention that it exists entirely separate and apart from its franchisees, Griffin’s actions could eventually set in motion NLRB actions that compel McDonald’s to bargain with franchisee employees.

McDonald’s and other large franchisers contend that Griffin’s actions threaten a franchising industry that employs 8.5 million workers in a fast-growing sector of the slowly recovering U.S. economy. But labor groups and fast-food workers argue that McDonald’s must answer for how its franchisees treat employees because the company, directly and indirectly, dictates how both the franchisee and the franchisee’s employees do their jobs.

Griffin did not explain his decision Friday, but his office said in a statement that computer technology has enabled the company to control franchisee employees in various ways that were once impossible.

“Through its franchise relationship and its use of tools, resources and technology,” the office of general counsel said, McDonald’s “engages in sufficient control over its franchisees’ operations, beyond protection of the brand, to make it a putative joint employer with its franchisees.” This finding, the statement said, was “further supported by McDonald’s’ … nationwide response to franchise employee activities while participating in fast-food worker protests to improve their wages and working conditions.”

McDonald’s, which has not yet been found liable of wrongdoing, said it will fight the complaints. “These allegations are driven in large part by a two-year, union-financed campaign that has targeted the McDonald’s brand and impacted McDonald’s restaurants,” the company said. “McDonald’s has taken the appropriate measures, working properly with its independent franchisees, to defend itself against that attack on its business.”

The Fight for 15 movement, a multimillion-dollar campaign funded by the Service Employees International Union, launched the first fast-food strikes in 2012, calling on McDonald’s to increase worker pay to $15 per hour and drawing national attention from a public newly concerned about growing income inequality.

Friday’s complaints were greeted by the organizers as vindication for their vigorous effort to bring McDonald’s into the national spotlight. Fight for 15 Organizing Director Kendall Fells said they underscored “what most everyone now accepts as common sense: that McDonald’s is an employer and that the company is responsible for the workers at its restaurants.”

Business groups meanwhile, assailed the complaints as contrary to federal labor law and bad for business.

“Complaints that McDonald’s Corp. be considered a joint employer with other companies’ employees over whom they actually have no control directly is a major problem and is confronting the entire industry, not just McDonald’s’ proper,” said Robert Cresanti, executive vice president for government relations at the International Franchise Association.

A long time — perhaps years — will pass before the cases are finally resolved. The 13 consolidated cases issued by Griffin must now go through a lengthy hearing process. Any administrative ruling will be open to appeals to the NLRB and the courts. The hearings will be consolidated in three regional offices and will begin March 30, 2015, unless McDonald’s and the named franchisees agree to settle — a likelihood that’s vanishingly small.

Meanwhile, businesses and labor groups are also waiting for another shoe to drop on what constitutes a joint employer. The NLRB’s five members — who review decisions made by the agency’s regional directors and administrative law judges — are expected to decide shortly whether to change the board’s own interpretation of the joint employer standard, this time in a case involving Browning-Ferris Industries and one of its subcontractors.