McDonald's Corp (MCD.N) and some of its franchisees were named jointly in complaints filed on Friday by the U.S. National Labor Relations Board's Office of the General Counsel, accusing them of labor violations in a widely anticipated move that could have wide-reaching implications for businesses.
Complaints were filed in 78 cases claiming that McDonald's workers across the country were fired or intimidated for participating in union organizing and in a national protest movement calling for higher wages.
The complaints strike new ground in treating McDonald's, the world's largest restaurant chain, as a "joint employer," meaning that it could be held liable along with its franchisees for any violations, the NLRB's general counsel, Richard Griffin, said in a release.
Until now, McDonald’s and other companies that make wide use of franchises and contract employers have been insulated from such liability under the NLRB’s previous definition of what constituted a joint employer.
A McDonald's spokeswoman said the company and franchisees would fight the claims.
"These allegations are driven in large part by a two-year, union-financed campaign that has targeted the McDonald’s brand and impacted McDonald’s restaurants," said Lisa McComb, a company spokeswoman.
The complaints will be considered by administrative law judges beginning in March 2015; the decisions can be appealed to the five-member NLRB and ultimately to federal courts.
While Friday's move was the first step in a long process, it has the potential to rewrite long-held rules governing labor relations between parent companies and franchises that are run as independent businesses.
For the last three decades, the NLRB has held that franchisers may only be considered joint employers if they are involved in setting wages and hiring workers.
Mary Joyce Carlson, counsel for the Fast Food Workers Organizing Committee, the union-backed group behind the protest movement, said Griffin was right to treat McDonald's as a joint employer because of the control it exerts over franchises, including the way food is prepared and served.
Trade groups said the decision to treat McDonald's as a joint employer would lead to uncertainty about how employment agreements are enforced and when companies can be sued for labor violations.
“This is chaos,” said Michael Lotito, a lawyer with law firm Littler Mendelson who represents companies in labor disputes.
The real losers could be the franchisees if companies decide to abandon the franchise model, said Robert Cresanti, vice president of the International Franchise Association, whose membership includes McDonald's.
The franchise association says 8.5 million U.S. workers are employed by franchises.
Griffin, in a separate case in June, asked the NLRB to adopt a broader standard on joint employers that reflects the influence companies like McDonald's have over working conditions, such as requiring the use of scheduling software.
The board is set to decide in that case whether it will begin to apply the broader standard, which would impact industries far beyond fast food.
(Editing by Alexia Garamfalvi and Leslie Adler)