NLRB

NLRB Decision Could Make McDonald's Liable for Labor Practices of Franchisees by Julie Jargon

The National Labor Relations Board has notified McDonald's Corp. MCD +0.04% that it will start allowing workers filing labor complaints to treat the fast-food giant as a "joint employer" with its franchisees, a decision that could make the company liable for the labor practices of the thousands of independent operators who own its franchises. 

McDonald's employees, through a campaign organized by the Service Employees International Union, have alleged that they were fired for joining labor unions and have filed several lawsuits alleging that they were underpaid or had expenses deducted that left them below state or federal minimum-wage levels. 

If the NLRB's preliminary decision holds, it could set a precedent for the largely franchised fast food industry, in which parent companies are currently not held liable for the labor practices of their franchisees. Approximately 90% of McDonald's more than 14,000 U.S. restaurants are owned by franchisees. 

"We believe there is no legal or factual basis for such a finding, and we will vigorously argue our case at the administrative trials and subsequent appeal processes which are likely to follow from the issuance of the complaints," McDonald's said in a memo sent on Tuesday to franchisees about the NLRB decision, which was seen by The Wall Street Journal.