McDonald's wage plan renews debate on independence of franchisees

McDonald's Corp's (MCD.N) announcement that it will raise the average pay at its company-operated U.S. restaurants threatens to complicate an ongoing labor dispute that turns on whether McDonald's can be held responsible for the labor violations of its franchisees.

The decision to hike wages to around $10 an hour will affect only 90,000 of the roughly 750,000 McDonald's restaurant workers in the United States, because almost 90 percent of McDonald's restaurants are run by franchisees.

The International Franchise Association said on Thursday the move to raise wages was a "reminder" that McDonald's and its roughly 12,500 franchised restaurants are not "joint employers." The question of whether they are is at the center of closely watched cases before the U.S. National Labor Relations Board (NLRB) in which McDonald's has been accused by the agency's attorneys of intimidating workers who participated in union organizing and in a national protest movement calling for higher wages.

Steve Caldeira, president of the International Franchise Association, a trade group that represents franchisors including McDonald's and KFC parent Yum Brands Inc (YUM.N), said the wage plan demonstrates independent decision-making by franchisees separate from McDonald's.

"If the franchisees want to also raise the wages of their employees, they have every right as independent business owners to make decisions that allow them to hire and retain the best employees in the local markets where they operate," Caldeira said in a statement on Thursday.

But some worker advocates downplayed the significance of the wage decision to the NLRB proceedings.

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