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What Could NLRB’s Decision Mean To McDonald’s Business?

August 01, 2014 | About:

McDonald’s Corp. (NYSE:MCD), world’s largest fast food restaurant chain, was recently put under the scanner for faulty labor and wage practices in its franchised operations. The National Labor Relations Board’s (NLRB) general counsel declared that McDonald’s along with its franchisees could be held responsible for violating employee rights in its U.S. eateries. The decision on the matter is pending. Does it spell trouble for the fast food giant, and pave the way for unionizing in the country? Is the Illinois-based company in big trouble? Let’s take a closer look.

What’s the Hullabaloo All About?

McDonald’s employees accused it of several charges including treating workers badly, threatening and unlawfully dismissing them. As many as 181 such complaints were brought to the notice of the NLRB in the last 21 months, out of which 43 drew greater attention from the board. Labor groups raised their voices demanding McDonald’s to be declared a joint employer at its franchised outlets, hoping for more power at the workplace. Other demands included immediate unionization and increase in their hourly pay to $15.

McDonald’s restaurant, Source: www.flickr.com

Richard F. Griffin Jr., general counsel of the board announced that McDonald’s could be made accountable for all the decisions taken inside the franchise-held restaurants. In other words, the company runs the risk of being tagged as a joint employer that would take care of everything ranging from labors’ interests and rights to wages and impending unionization. However, the employees holding strikes for their rights claimed that McDonald’s was indeed a co-owner as it apparently kept a strict tab on the cleanliness, food and labor operations at the franchise-held eating joints.

Speaking on behalf of McDonald’s employees on a conference call, Micah Wissinger, one of the lawyers said that there are strong reasons why the company should be liable for the franchise activities. He said the fact that the fast food giant uses “computer systems that measure and track every aspect of the store’s operations” was proof enough for it.

McDonald’s feels that the announcement by NLRB forces to change “the rules for thousands of small businesses and goes against decades of established law regarding the franchise model in the United States.” NLRB has already started investigation on the matter with its five presidentially appointed members onboard. In case their verdict matches with that of the general counsel, McDonald’s could move to the federal court.

What Could the Impact Be?

McDonald’s has thousands of restaurants across the country, 90% of which are run by franchise owners. The company could find itself in a soup if the law gets a green signal, as it could mean a figurative win for the employees. Labor forces could get strong support from public, which could have an adverse impact on McDonald’s reputation.

Final Thoughts

NLRB’s decision would be extremely important as far as McDonald’s business is concerned, since it could decide the fate of how employees at fast-food corporations would be treated in future. As Fast Food Forward Organizing Director Kendall Fells said, “At some point, McDonald’s and the industry as a whole will decide that it makes sense to sit at the table with these workers, because the workers have now changed the power dynamic between them and the actual corporations.”

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