The federal government has said in a major, closely watched lawsuit that McDonald's Corp. violated workers' union rights at its individual franchise restaurants. What officials haven't said is exactly how the corporation did this since it didn't actually employ the workers, the franchise owners did.
To win the case, the government will have to prove that McDonald's is a "joint employer" of the workers with the franchises — a concept that runs counter to very understanding of what a franchise is: a legally separate entity that merely rents out the parent corporation's trademarks.
The actual charging documents by National Labor Relations Board, the federal labor law enforcement agency, do not explain how the corporation is a joint employer, merely asserting that it is one. In response, McDonald's filed a "motion for bill of particulars," demanding the board lay out its case.
The board hasn't complied and isn't likely to until May, according to lawyers representing the workers before the board. The case officially began Monday in Manhattan, but it is still dealing with preliminary matters.
Sources on both sides and comments made by the government's top lawyer in the case indicate that it will hinge on two things: The technology provided to the individual franchises to track their production and the argument that the corporate franchise model itself is inherently unfair to workers engaged in labor activism. Richard Griffin, the board's general counsel, cited both issues in an October speech to West Virginia University.
A McDonald's spokesman did not respond to a request for comment.
Under current law, a franchising corporation can give instructions on running a business, including staffing, to an individual franchise restaurant to protect the company brand without becoming a joint employer.
In the rare speech to West Virginia University Law School, Griffin said that advances in technology required a re-evaluation of that legal standard. He said corporations such as McDonald's provide software that tracks the sales and staffing levels at a restaurant.
"They have programs that run an algorithm that say once these costs get to a certain percentage of these costs, you have got to start sending people home. Now, that type of involvement in the hour and terms and conditions, we argue, goes beyond protecting the brand," Griffin said.
A labor lawyer who has previously represented McDonald's and requested anonymity, said the software could be a problem for the corporation if it is shown that it receives the data from the restaurants and then sends instructions back. But if the software merely uses algorithms as Griffin indicated, that is a much weaker case for the board.
"My guess is that all this is a happening without human intervention," the lawyer said. "They're just giving them the tools to run their business."
The other argument made by Griffin is that the current standard makes it too hard for workers to invoke their labor rights and the board should ensure that workers can invoke those rights. That could be done by adopting a standard that said a joint employer need not have "direct" control over the workers, just "potential" control. The board used this standard decades ago and should return to it, he said.
"The changing nature of employment … means that in order to have effective collective bargaining, you need entities that meet the traditional standard involved in the collective bargaining process," Griffin said.
Sarah Leberstein, senior attorney with National Employment Law Project, agreed, saying that making a corporation liable for any violations would boost workers' rights and that was reason enough.
"If only the undercapitalized franchisee is on the hook for any labor violations, workers often have no real remedy when they don't get the pay that they are owed or when they are fired for exercising their protected right to organize," she said.