McDonald's squares off against U.S. labor board in trial

NEW YORK (Reuters) - A highly anticipated trial over whether McDonald’s could be on the hook for its franchisees’ alleged retaliation against employees who participated in fast-food worker protests across the United States began on Thursday.

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At issue is whether McDonald's USA, a unit of Illinois-based McDonald's Corp MCD.N, is a "joint employer" of workers at its independently owned franchises, as the National Labor Relations Board says. That would make the company liable for labor law violations by the franchisees, which operate 90 percent of McDonald's U.S. restaurants.

The trial before an administrative NLRB judge in New York has attracted national attention because it is expected to show how the board’s new standard for joint employment applies to the franchisor-franchisee relationship, although the ruling in the case will apply to McDonald’s only. Critics have cast the new standard as an existential threat to the franchise model.

In his opening statement, NLRB lawyer Jamie Rucker described the level of control McDonald’s has over its franchisees, setting everything from cleaning requirements and the number of seconds for order-taking to pre-packaged interview questions for prospective hires.

“If McDonald’s is involved in determining working conditions at its franchised operations, it is responsible for what happens to workers subject to those conditions,” Rucker said.

Workers began filing complaints with the Washington-based NLRB in 2012, saying that McDonald’s and some franchisees threatened, surveilled, disciplined and fired them for protesting for higher wages and union rights in the demonstrations.

The NLRB’s general counsel issued complaints in 2014, eventually consolidating a case for trial against the company and franchisees in six cities.

McDonald’s lawyer Willis Goldsmith said Thursday that the company “is not now and never has been” a joint employer and that its franchises are independent.

The company does not control who the franchisees hire or their workers’ wages, benefits or schedule, Goldsmith said.

Attorney Robert Brody, who represents New York City franchisees in the case, backed McDonald’s. McDonald’s may provide the “cookbook,” but franchisees make their own decisions on employment issues, he said.

The NLRB expanded its joint employment standard in August in a landmark decision involving Browning-Ferris Industries Inc. Under the old standard, a company had to have direct control over employment conditions to be a joint employer, but the new test considers indirect and unexercised control.

A joint employment finding could make it easier for workers to fight for better wages and conditions since they would be negotiating directly with parent companies.

Reporting by Karen Freifeld in New York; Additional reporting by Robert Iafolla in Washington and Lisa Baertlein in Los Angeles; Writing by Alexia Garamfalvi; Editing by Lisa Von Ahn and Matthew Lewis