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Policy: Labor

Will the NLRB super-size Big Labor's fast food industry push?

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Opinion,Columnists,Sean Higgins,Labor unions,Labor,NLRB,SEIU,McDonalds

Big Labor has put a lot of time and money behind unionizing the fast food industry but hasn't had much to show for it so far.

They might soon get a lucky break though when a federal government agency decides a case that could rewrite corporate franchising law.

The problem Big Labor has is that in most cases your favorite drive-through burger joint is actually a locally owned small business. About 80 percent of the 2,700 McDonald's restaurants in the U.S., for example, are not owned by the corporation.

Even though each one has pretty much the same menu and is staffed by people in the same red and yellow uniforms, in reality the owner is just paying to use the McDonald's brand name.

That's franchising in a nutshell. For the unions, that means they typically cannot target a corporation and organize all the workers in one swoop. Instead, the unions would have to do each franchise individually, since those are the real employers.

An upcoming National Labor Relations Board case involving complaints against McDonald's may fix that problem for unions. The NLRB might decide that both the parent corporation and the local franchises are in fact joint employers.

Such a ruling would make no sense, the fast food industry contends. In a recent Hill op-ed, International Franchise Association President Steve Caldeira noted that all legal filings related to the employees, like their IRS identification numbers, are done by the franchises.

"Franchisees process their own payrolls and hire and fire their own employees. They also determine wage rates, benefits and work schedules," Caldeira said. Franchisees and corporate parents file their taxes separately too.

Changing that understanding would be a tremendous win for Big Labor though, allowing it to focus its organizing efforts on a single corporate entity rather than the piecemeal approach it has been stuck with.

Some, like the Service Employees International Union and United Food and Commercial Workers, already have extensive corporate pressure campaigns up and running.

In fact, in what is probably not a coincidence, the group that filed the lawsuit, the Fast Food Workers Committee, has close ties to SEIU. Kendall Fells, the president of the committee, is a former SEIU organizer, having worked there as recently as 2011, according to the Sunlight Foundation.

Business groups estimate that SEIU is putting $15 million into its effort to organize the fast food industry. The main tactic has been to push for a minimum $15 industry wage, mainly through protest events, including one at the McDonald's shareholder's meeting in Chicago in May.

SEIU hosted an event with 1,200 fast food workers this past weekend in Addison, Ill., called the Fight for 15 National Convention to further coordinate their efforts.

"A selfish few at the top are using their power to hold down wages, no matter how much that hurts families and communities across the country," declared SEIU President Mary Kay Henry, making clear they expect to run an anti-corporate campaign, not several small local ones. Given the NLRB's pro-labor tilt under President Obama, they have reason to be optimistic.

Either way it will be a big deal. The Bureau of Labor Statistics states that there are 3 million food service workers in the U.S. Their average wage is just above $9 an hour, compared with the federal minimum of $7.25.

Then again, why would the decision necessarily be limited to the food industry? Pretty much every product or service from hardware to lingerie is franchised in the U.S. Caldeira puts the total number of franchisees at 770,000, accounting for about one of every eight jobs.

It'll be a rude shock for those local employers if they wake up one day and discover that their workforce was unionized without them being involved. Given how few of the fast food industry's workers have joined the protests, it'll be a shock for them too.

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