A settlement announced Monday between McDonald’s Corp. and the National Labor Relations Board does not answer whether the corporation is considered a “joint employer” with its franchisees, which significantly expands a company’s legal liability.
The announced deal nevertheless represents the latest effort by the board under President Trump to undo the activist, pro-union stance the board, the federal government’s top labor law enforcement agency, took during President Barack Obama’s administration, especially involving the joint employer issue.
Joint employer refers to when one company can be held liable for violations by a separate company. In 2014, the NLRB consolidated numerous labor rights violation cases against privately owned, franchised McDonald’s restaurants and added the corporation as a co-defendant, arguing it was a joint employer equally responsible for the violations.
That was a highly controversial departure from past practice by the board, which had previously held that franchiser corporations were not legally liable in such situations. The shift, a potentially vast expansion of legal liability, alarmed business groups, which lobbied Congress and the White House to reverse the decision.
A proposed settlement was reached by the board and McDonald’s Corp on Monday. In a statement Tuesday, the NLRB said the deal, which must be approved by administrative law judge, would “provide 100 percent of back pay for the alleged discriminatees and represent a full remedy for all unfair labor practice cases pending.”
The NLRB does not state whether McDonald’s was found to be a joint employer with its franchises. A representative for McDonald’s could not be a reached. A board spokesman said a Freedom of Information Act request would be required to get the details of the proposed deal.
In a statement Monday to Reuters, McDonald’s said it had not admitted any wrongdoing. A source with a major trade association said it was the source’s understanding that the deal left the question of whether McDonald’s was a joint employer unresolved.
Fight for $15, the Service Employees International Union-funded activist group that was largely responsible for the initial labor rights complaints, denounced the settlement. “McDonald’s recently proposed settlement with the labor board is not a settlement. In a real settlement, McDonald’s would take responsibility for illegally firing and harassing workers. We look forward to presenting our objections to the judge.”
Business groups called on Congress to pass legislation to limit when corporations could be called joint employers. “This apparent settlement does nothing to settle the uncertain terrain facing America’s 733,000 franchise owners regarding the question – Who’s the boss? …The only way to end the joint employer saga facing franchise owners is by passing bipartisan legislation that protects business relationships and promotes economic growth,” said Matt Haller, senior vice president for government relations for the International Franchise Association.
In December, NLRB General Counsel Peter Robb, a Trump appointee, told the board’s regional directors to consult with the board headquarters before issuing complaints involving questions of joint employer status.
The same month, the board issued a decision in a case called Hy-Brand that overruled a 2015 case called Browning-Ferris that had expanded the use of joint employer. However, the board vacated the Hy-Brand decision last month after it determined that one of its members, Trump appointee William Emanuel, should have recused himself from voting in it. The board’s action meant that the Obama-era joint employer rule is still technically in effect.
