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McDonald’s agrees to pay $26M in wage lawsuit

The company agreed to change certain practices related to overtime pay and meal breaks to settle a 6-year-old California complaint.
Photograph courtesy of McDonald's Corp.

McDonald’s has agreed to pay $26 million to settle 6-year-old allegations that it violated wage and hour laws at company-run restaurants in California.

The Chicago-based burger chain didn’t admit wrongdoing in the lawsuit, which alleged that the company cheated 38,000 workers in California out of overtime pay, meal and rest breaks.

The company agreed to various provisions designed to ensure that employees are paid and get adequate breaks.

“While we continue to believe our employment practices comply with the California labor code, we have decided to resolve this lawsuit filed back in early 2013,” the company said in a statement. “With this settlement, the parties have reached a mutually acceptable resolution and have submitted the settlement to the court for its review and approval.

“McDonald’s remains committed to our employees, and we continuously roll out additional trainings and resources across corporate-owned restaurants to promote continued compliance with all wage and hour laws.”

The settlement hands a big victory to labor activists that have targeted McDonald’s for several years.

Workers, supported by groups such as the American Civil Liberties Union and the Service Employees International Union, have filed several lawsuits in recent years against the fast-food burger giant over various issues related to the treatment of employees. The labor-backed Fight for $15 movement has been pushing to unionize fast-food workers for years.

The campaign has included lawsuits against the company. Recent suits include one over sexual harassment following CEO Steve Easterbrook’s ouster and another over violence inside newly remodeled locations.

The California wage lawsuit was originally filed in a California state court in 2013 by Maria Sanchez. Three other employees later signed onto the suit, which covered wage theft dating back to 2009.

The workers alleged that McDonald’s violated state overtime laws. California law requires overtime pay when a worker’s day exceeds eight hours.

For instance, activists said that when an employee worked from 8 p.m. to 2 a.m., and then from 2 p.m. to 8 p.m. the next day, it would count as 12 hours. Therefore, the employee was eligible for four hours of overtime pay, because their work had constituted a 12-hour shift over a 24-hour period. McDonald’s would classify them as two shifts on two separate days.

Workers also alleged that the company wouldn’t provide full rest breaks when restaurants were busy, often requiring employees to take their breaks at the beginning or end of their shift. And they said they’d require workers to clean and iron their uniforms without pay or reimbursement.

“We've won our hard-earned pay back and forced McDonald's to change its illegal wage-theft practices, but our fight is far from over,” Leonidas Davila, an employee at a company-run McDonald’s restaurant in Los Angeles, said in a statement provided by Fight for $15. “We want the company's new CEO to hear us loud and clear: We will not stop joining together and speaking out until we win our union.”

According to the activist group, McDonald’s agreed to pay a one-hour wage premium to employees when the company fails to provide them a full meal period or rest break during the day.

The company also said it would allow employees to leave during those breaks and agreed to maintain electronic time records to accurately track the duration of the meal period. The company also agreed that it would stop requiring workers to take their breaks at the beginning or end of the shift.

The settlement also requires the company to train employees and management about the changes.

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