McDonald's 'joint employment' trial delayed amid settlement talks

Jan 19 (Reuters) - McDonald’s Corp and a U.S. labor board are in talks to settle a case claiming the fast food company is liable for purported labor law violations by its franchisees, leading a judge on Friday to pause a longrunning trial.

Administrative Law Judge Lauren Esposito in Manhattan said that even though the trial is expected to wrap up as soon as next week, McDonald’s, its franchisees, and the National Labor Relations Board’s general counsel should have a chance to pursue a settlement. The trial began in 2015.

The office of General Counsel Peter Robb, who was appointed by President Donald Trump and took office in November, requested the stay on Wednesday. The general counsel said a board decision released last month in a separate case that narrowed the definition of “joint employment” may have wiped out some of the claims against McDonald’s.

The McDonald’s case had been seen as an important test of when franchisors may be considered joint employers and required to bargain with unions or be held accountable for franchisees’ labor practices. Business groups have said that treating franchisors as employers could upend the franchise model.

McDonald’s spokeswoman Terri Hickey on Friday said “McDonald’s USA is simply not a joint employer with its franchisees, and we are hopeful that this development will lead to a long overdue and successful resolution of the pending cases.

The NLRB declined to comment.

Robert Brody, a lawyer for McDonald’s franchisees in New York City, said the decision made sense after the recent NLRB ruling revising the definition of joint employment.

On Thursday, the Service Employees International Union urged Esposito not to pause the trial. The union said settlement talks could proceed after the trial ended.

The SEIU did not immediately have comment on the decision.

The union and some McDonald’s workers filed a series of complaints with the NLRB beginning in 2012. In 2014, the general counsel issued a complaint that said McDonald’s controlled working conditions at franchises in various ways including through corporate policies and scheduling software. McDonald’s also helped franchise owners respond to nationwide protests calling for fast food companies to pay higher wages, the general counsel said.

The NLRB had said in a 2015 decision that any company with indirect control over a contractor’s workforce could be a joint employer. But last month’s ruling by a new Republican majority NLRB revived an older, narrower test that requires direct control. (Reporting by Daniel Wiessner in New York and Robert Iafolla in Washington; Editing by Alexia Garamfalvi and Grant McCool)