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Policy: Labor

McDonald's can't appeal NLRB franchise decision

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Politics,Food and Drink,Sean Higgins,Labor unions,Labor,PennAve,NLRB,McDonalds

McDonald's cannot appeal the government's decision that the fast-food giant can be sued over employee complaints at its franchised restaurants. That's because there is no official decision to appeal.

The National Labor Relations Board said last month that its lawyers would treat the hamburger chain as a co-employer in 43 cases charging unfair labor practices at various franchised restaurants.

But the decision by the federal labor law enforcement agency was a decision by its general counsel, Richard Griffin, not a ruling by its full board.

That is a significant obstacle for McDonald's because there is nothing to object to in court, at least until the NLRB rules in the underlying cases.

The decision means effectively that any time that there is an allegation of unfair labor practices at a privately owned McDonald's, the corporate parent can be dragged in as a defendant in the case. Activists typically did that anyway, but it was fairly easy for the company to get out of such cases based on legal precedent. McDonald's says 80 percent of its 3,000 U.S. restaurants are privately owned by franchisees.

Since November 2012, 181 cases involving McDonald's have been filed with the NLRB.

Griffin's decision startled businesses because it overturned decades of case law regarding franchiser-franchisee relations.

"It's an internal instruction that is not public. It's a directive to these NLRB attorneys to redefine the law and use it in this new way. There is no appeal because there is no final decision," said Robert Cresanti, executive vice president with the International Franchise Association. McDonald's is one of the group's 1,200 franchiser members.

The general counsel's decision may not have even been written down. Spokesmen for both McDonald's and Berlin Rosen, the public relations firm representing the plaintiffs in one of the cases, said NLRB officials told them over the phone.

"My understanding is that there is not something [official] in writing," Berlin Rosen senior associate Laura Brandon told the Washington Examiner.

Industry officials believe the NLRB had been planning the change to make companies responsible for its franchised locations.

They noted that in May the agency requested legal briefs in another case on whether the board should "adhere to its existing joint employer standard or adopt a new standard."

The general counsel's office submitted a brief that said the old standard of treating franchisees as separate businesses should be dropped because "it undermines the fundamental policy of the [National Labor Relations] Act to encourage stable and meaningful collective bargaining."

Griffin is a former top lawyer with International Union of Operating Engineers.

"What's remarkable is that he did not wait for the NLRB to change the joint employer standard," said Angelo Amador, vice president of labor and workforce policy at the National Restaurant Association. "He is probably expecting them to rule his way, at which point it becomes moot." McDonald's is an association member.

The NLRB declined to comment beyond the press release it issued when Griffin made his decision. A McDonald's spokeswoman declined to comment.

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