McDonald's Labor Trial Could Upend the Restaurant's Business Model
The hamburger chain’s parent company could be on the hook for liabilities at local eateries
Judge Lauren Esposito, in a trial in New York City, on Thursday began the process of determining whether McDonald’s USA is a joint employer of the hamburger flippers who work in your local McDonald’s.
“Unions stand to gain from a court win. They hope to attract enough workers with the promise of a higher wage to be able to unionize the fast food workers.”
For McDonald’s employees, the answer to the question of who employs them has always been obvious. The person who hired them, sets their hours and pays them is the boss. For millions of people employed by a franchise, the franchise has been their employer.
The National Labor Relations Board is seeking to change that by moving to consider the parent company, McDonald’s USA, as a joint employer of the franchise. In plain English, that means that if an employee charges his boss with an unfair labor practice, such as withholding pay or being forced to work too many hours, McDonald’s USA is also responsible.
If Esposito rules for the NLRB, this decision will affect all U.S. franchises, not just McDonald’s franchises. This means that the American system of franchised business will be dealt a severe blow.
Since Esposito is employed by the same NLRB that is bringing the charges — a potential conflict of interest — it would not be surprising if the decision went in the NLRB’s favor. Esposito represented unions and employees before the NLRB for seven years, and then worked for the NLRB as an attorney for nine years prior to becoming a judge in 2011.
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This piece originally appeared in WSJ's MarketWatch