NEW YORK — After three and a half years of trading legal motions, arguments over whether McDonald's should be responsible for the alleged labor law violations of its franchisees burst into the open Thursday, in a case that could carry far-reaching implications for the structure of the industry and the rights of workers within it.
The case arose out of hundreds of complaints lodged by fast food workers alleging they were illegally punished after protesting for higher wages. The general counsel of the National Labor Relations Board has charged that the McDonald's corporation should be held equally liable for any violations the franchisee commits -- an argument that, if upheld, could allow workers to unionize and bargain directly with headquarters staff.
In opening statements before an administrative law judge here, lawyers for the labor board argued McDonald's should be considered a “joint employer” because it substantially controls the lives of cooks and cashiers who work in its franchised locations.
“The joint employer concept is not novel,” said Jamie Rucker, the lead lawyer on the case for the NLRB’s general counsel. "It is also not narrow.” Rucker was backed by benches full of attorneys for the agency and outside firms retained by the Service Employees International Union, which assisted in filing the hundreds of claims on behalf of protesting workers who claim they were illegally retaliated against.
Rucker then proceeded to describe a system in which McDonald's monitors and controls much of what goes on in its franchised locations.
It starts, Rucker alleged, with the training each franchise owner and manager must undergo before being entrusted with a restaurant. It continues with an extensive manual that specifies the size of crews, their job descriptions, and how many minutes ought to be spent on each individual task. McDonald's also requires that the hiring process by franchisees meet certain specifications, and it provides tools to help them schedule shifts according to periods of peak demand.
McDonald's enforces its standards through “operations consultants,” who review how each restaurant functions, and make suggestions for improvement, Rucker argued. For instance, consultants instructed franchise owners to reduce staffing, in one instance, or make sure they were using the required software correctly.
“The level of control this gives McDonald's over its franchisees is very fine grained and specific,” Rucker said.
Lawyers for McDonald's vehemently disputed not just Rucker’s accounting of the evidence, but also how the court proceedings have been conducted, and the motivations of general counsel Richard Griffin in bringing the case, especially when no court has ever found that McDonald's was a joint employer with its franchisees.
“This general counsel believes that franchising is a bad business model,” said Willis Goldsmith, a partner at the law firm Jones Day, representing McDonald's corporate headquarters. “Mainly he believes it’s a bad business model for union organizing. He believes that unions would be better off if franchisors were joint employers with their franchisees.”
Goldsmith argued that everything McDonald's does to improve its franchisees’ performance is essential to maintaining the brand, which a franchisor is allowed to do without becoming a joint employer. Furthermore, he responded that even if the “operations consultants” sometimes directed franchisees rather than made suggestions, they were only isolated cases.
“Is it possible that one or more business consultants said or did something or crossed a line between advice and a direction, or was considered by the franchisee to be more than advice?” Goldsmith asked. "Of course it’s possible. But so what. That’s not control either.”
Goldsmith also argued that franchisees wouldn’t be in the business if they did not control their own operations. “The major incentive for them to enter into a franchising relationship is that it allows them to be their own boss,” he said. “This campaign is an attack by the union and its allies on corporate restaurants, franchised restaurants, on all restaurants.”
Also present at the hearing were some of the franchisee representatives themselves, whom their attorney Robert Brody cast as hardworking entrepreneurs who had been persecuted and in some cases driven out of business by an activist campaign against them. Like Linda Dunham, whose late husband opened the first McDonald's location in Manhattan, at 56th and West 8th Street. Dunham had served as chair of the Ronald McDonald House Charities, while her husband ran the business, but the litigation proved too much to handle.
"Why they picked her store, we have no idea. But the pressure on her store was incredible," said Brody, listing protests and government investigations. "The attacks led her to give up her chair position. Linda sold her store in August of last year, while this case goes on."
The hearing is slated to continue next week, but the fight may continue for months, as similar proceedings take place in two other cities.