Editor’s Note: To fuel discussion, Restaurant Business Online is posting this assessment of the recent racial-discrimination lawsuit filed against McDonald’s Corp. The suit is the first to ascribe responsibility to a franchisor for a franchisee’s alleged wrongdoings since the National Labor Relations Board redefined a franchisor as a joint employer.
The opinion piece comes from the National Employment Law Project, which describes itself as a non-partisan, not-for-profit organization that conducts research and advocates on issues affecting low-wage and unemployed workers. The author, Catherine Ruckelshaus, is general counsel of the NELP.
Comments and other responses can be emailed to the Director of Digital Content Peter Romeo, email@example.com. Parties of all perspectives are invited to join the dialogue.
Holding McDonald’s Accountable
By Catherine Ruckelshaus
McDonald's is rightly on the hook for violations of employees’ rights at its franchises.
Accused of ignoring race-based firings and harassment in a lawsuit filed last week, and named in NLRB complaints for unfair labor practices in December, it cannot continue to control its franchisees’ operations and yet neglect their labor conditions. These complaints stand for the common sense proposition that if you work at McDonald's, then you work for McDonalds, not just one of the company's franchisees.
In last week’s lawsuit, workers allege that supervisors told employees that it was “too dark” in the restaurants and that there were “too many black people” working there. When the workers complained to corporate, their pleas were ignored. The lawsuit names both McDonald’s Corp. and the franchise owner and his company as responsible for the discrimination and harassment.
McDonald’s repeated assertions that it is not the boss at these stores cannot stand. Federal officials late last year filed a dozen complaints charging the company was indeed a joint employer responsible for labor violations at stores across the country.
The NLRB complaints were deemed a radical move by the International Franchise Association, but the holding should surprise no one who understands how the fast-food giant sets up and engages with its franchisees and how our laws interpret who's responsible as an employer.
Brand franchising is the core-operating model in fast food. Roughly 90 percent of McDonald's stores are franchises, operating under format contracts: McDonald’s is the landlord, choosing the location(s) the franchise owner can operate, supply chain vendors, pricing, and store hours, all to protect and promote the continuity of the brand. McDonald's high-tech quality service protocols dictate highly specific customer scripts, cleanliness and appearance rules, and real-time monitoring of worker hours, staffing levels, clocking-in and -out times, and revenues at each outlet.
Dominos, Wendy’s, Taco Bell, Burger King and other chains operate in similar ways, with varying degrees of control over their franchised operations. There’s nothing inherently amiss about this growing outsourcing model, until something goes wrong in the workplace.
For two years now, fast-food workers have gone on strike in growing numbers to protest low pay, unpredictable hours, wage theft, and unsafe workplaces. Each time, McDonald's and other corporations have chorused that it's not their problem – talk to the franchise operators. And that's the rub: the corporate franchisors control everything until there is a labor problem. Then, suddenly, they are not responsible and plead ignorance. This buck-passing results in persistently poor working conditions in the franchises, who are squeezed by the corporation's sometimes-onerous franchise requirements and left unable to comply with baseline workplace laws.
There are more than 3.5 million fast food workers in the U.S. and 75 percent of them work in franchised operations. Fast food jobs are among the country’s lowest-paying; average front-line hourly pay is $8.69, with many jobs paying at or near minimum wage. Many fast food workers get only part-time hours though they need full-time work; roughly 87 percent receive no employer-provided health benefits, and more than half of the families of McDonald's cooks, cashiers, cleaners and other workers must rely on taxpayer-funded safety net programs to make ends meet.
The franchise operators are often not in a position to do much about the poverty-level wages and dangerous conditions, as they struggle to run a stable business under the corporate franchise rules. Workers and the franchisees need McDonald's and other corporate franchisors to step up and care about what's happening in their restaurants.
Holding the franchisors responsible does not portend the end of franchising, but it could mean the end of fast food's dismal working conditions. If companies like McDonald's understand that they can be held accountable for working conditions they create and control through the franchise conditions they impose, they will have an incentive to pay more attention to their franchisees’ practices; workers will have more avenues to assert their rights and remedy violations of them; and the franchisees will have more negotiation leverage.
Across the so-called shared economy, corporate outsourcing is increasingly the norm. Whether by employing multiple layers of contractors, using staffing or temp firms to supply workers, franchising, misclassifying employees as independent contractors, or other practices, outsourcing companies distance themselves from labor-intensive aspects of their businesses and in so doing, attempt to shift accountability for their workers elsewhere.
This restructuring of employment arrangements may be the reality of work today, but it should not spell the end of living wage jobs or business responsibility for the work and workers these corporate giants control. The discrimination lawsuit and the NLRB complaints mean that a company's decision to outsource a business does not translate into an outsourcing of responsibility for the workers in that business.