The National Labor Relations Board, the main federal labor law enforcement agency, on Thursday, settled a long-running case against McDonald’s Corporation, finding that the fast-food giant is not responsible for labor law violations at its franchisee restaurants.
The claim that McDonald’s Corporation was a “joint employer” with its franchisees had been a highly controversial allegation first made by the NLRB in 2014 when it had a Democratic majority appointed by President Obama. The McDonald’s case, which was based on allegations by union-allied activist groups, could have set a major precedent and vastly expanded corporate legal liability on labor issues.
The NLRB, which now has 3-1 Republican majority appointed by President Trump, has been attempting to dispose of the case for the last three years. A National Labor Relations Board administrative law judge rejected as insufficient a proposed settlement in July. Thursday’s action by NLRB officially overrode the judge’s decision.
The International Franchise Association cheered the news. “After five years of litigation, five years of unnecessary legal costs, and five years of uncertainty in the franchise sector, IFA is thrilled the NLRB came to this common-sense conclusion,” said IFA senior vice president of government relations Matt Haller.
The 2014 case was sparked by complaints made by Fight for $15, a nonprofit activist group founded and run by the Service Employees International Union, which has long sought to organize workers at fast food chains. The board argued that the corporation was a “joint employer” responsible for the firing by local restaurants of workers involved in the SEIU’s efforts.
For decades, the joint employer doctrine required one company to have direct control over another businesses policies, but the Obama-era board attempted to change that to the much vaguer “indirect control.” That standard could potentially make a corporation liable for anyone it franchises its brand to. Business groups loudly opposed the move and lobbied Congress and the White House to reverse it.
