(Bloomberg) — The National Labor Relations Board determined that McDonald's Corp. is a joint employer with the owners of its restaurants, a decision that threatens to shake up the decades-old fast-food franchise system.
The NLRB's general counsel found that McDonald's has enough power over its individual franchises that it should be considered an employer, according to representatives for plaintiff lawyers in the case. McDonald's confirmed that it had been notified of the decision today.
The U.S. fast-food industry is largely franchised, meaning independent businesspeople own and operate the restaurants. They pay a percentage of their sales to the parent corporation, which manages the brand and image. McDonald's U.S. locations are about 90 percent franchised, and the company says it has a hands-off approach to how employees are managed. If McDonald's is considered a joint employer, it may have to police its franchisees more closely to prevent labor infractions.
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McDonald's, based in Oak Brook, Ill., objected to the decision today, saying it would unfairly change the rules for thousands of small businesses, along with other corporations that rely on franchising.
"This decision to allow unfair labor practice complaints to allege that McDonald's is a joint employer with its franchisees is wrong," Heather Smedstad, the restaurant chain's senior vice president of human resources, said in a statement. "McDonald's will contest this allegation in the appropriate forum."
See also:
- NLRB memo promises bumpy ride for employers
- NLRB raps Hooters in wake of bikini contest protest
- Reconstituted NLRB to scrutinize employee handbooks
To contact the reporter on this story: Leslie Patton in Chicago at [email protected]
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