Employment fissuring in franchising: NLRB pursues McDonald’s

By Erik B Wulff, Harriet A Lipkin and Dianne Rose LaRocca

On 29 July, the general counsel (GC) of the National Labor Relations Board (NLRB) announced that, absent settlement, he has directed the issuance of complaints in 43 unfair labour practice (ULP) cases, alleging that McDonald’s franchisees and their franchisor, McDonald’s USA, were joint employers, jointly responsible for alleged unfair labour practices engaged in at franchisee restaurants. The NLRB GC’s decision is significant because it further illustrates that the franchise model — and its underpinning that franchisees are separate and independent businesses — is under attack on several fronts.

The National Labor Relations Act (NLRA) is the federal labour law that provides non-supervisory, private sector employees with the right to engage in or refrain from union and other protected concerted activities. An employer commits a ULP when it interferes with protected employees’ NLRA rights. NLRA violations may be remedied with ‘make-whole’ remedies, including back pay, reinstatement, rescission of unlawfully issued discipline and the posting of a notice to employees in which the employer notifies its employees of their federal rights and commits to comply with federal labour law. Punitive damages and/or fines are not available under the statute.

The procedure likely to follow the NLRB GC’s decision to issue the complaint is as follows: a trial before a NLRB administrative law judge (ALJ) will be scheduled; an NLRB lawyer will prosecute the case; the ALJ will issue a decision; the ALJ’s decision will be submitted to the NLRB for a final NLRB decision; and decisions of the NLRB may be appealed and/or enforced in a US Court of Appeals…

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