NEW YORK — McDonald’s says it has been notified by a labor regulator that it can be named a “joint employer” for workers in its franchisee-owned restaurants.
The decision by the National Labor Relations Board was being closely watched because it could potentially expose McDonald’s to liability for the working conditions and practices in its franchisees’ stores. It also puts pressure on the world’s biggest hamburger chain at a time when protests for higher wages in the fast-food industry have captured national attention.
McDonald’s and other fast-food companies have repeatedly said they are not responsible for determining wages and other terms at their franchised locations.
In the U.S., the vast majority of McDonald’s more than 14,000 restaurants are owned and operated by franchisees. The same is true for many other companies, including Burger King Worldwide Inc. and Yum Brands, which owns KFC, Taco Bell and Pizza Hut. The companies make money by collecting royalty and sales fees from franchisees.
Labor organizers say McDonald’s should be held accountable as a joint employer because the company has so much control in setting the terms of operations even at its franchised locations, such as what menus, supplies, uniforms and training materials are used. The matter has come under the spotlight as fast-food worker groups backed by the Service Employees International Union have agitated for pay of $15 an hour and the right to unionize since late 2012.
Representatives for the National Labor Relations Board and the fast-food workers group weren’t immediately available for comment.
In March, lawsuits seeking class-action status against McDonald’s and its franchisees were filed in three states, saying they engage in a variety of illegal practices to avoid paying workers what they’re owed. The suits detail a range of labor violations, including the denial of rest breaks and the use of company software that monitors the ratio of labor costs as a percentage of sales at its restaurants. McDonald’s, based in Oak Brook, Illinois, has said it would investigate the claims.
Heather Smedstad, senior vice president of human resources for McDonald’s USA, says the company was notified about the decision on Tuesday.
She said McDonald’s plans to contest the decision and that it doesn’t direct the hiring, termination, wages or hours for workers at franchised locations.