McDonald's settles joint employer case

  • December 12, 2019

The NLRB on Thursday instructed an administrative law judge to approve a $172,000 settlement agreement with McDonald’s Corporation that relieves the fast-food giant of liability as a “joint employer,” responsible for labor violations committed by its franchisees.

The agreement resolves a legal challenge brought five years ago by the NLRB’s Obama-appointed general counsel to hold the fast-food giant jointly liable for its franchisees’ firing of McDonald’s workers who joined Fight for $15 protests. The Trump-controlled NLRB was eager to resolve the case, but the settlement was rejected previously by an administrative law judge as too favorable to McDonald’s.

The NLRB general counsel appealed that decision, leaving the settlement’s approval up to the Republican-controlled NLRB.

Under the deal, McDonald’s will provide $171,636 in back pay to 20 franchisee workers who alleged retaliation for their participation in union protests. The fast-food giant also agreed to create a $250,000 fund to provide payouts in the event that the settlement agreement is breached. If, after 15 months, the NLRB’s regional director determines there are no such pending claims, the remainder of the fund will be returned to McDonald’s.

The agreement also requires the restaurants named in the case to post a notice explaining the settlement and employees’ rights under federal labor law. The notices must also be mailed to former employees.

The order instructing the settlement’s approval was written by a three-member panel that included board member William Emanuel, who was cleared by agency ethics officials to participate. Emanuel’s prior work at a management-side law firm that assisted McDonald’s in its defense prompted the NLRB to vacate a 2017 ruling on joint employment after the NLRB’s inspector general concluded that Emanuel had a conflict of interest.

Democrats, labor unions, Richard Painter, President George W. Bush’s chief ethics lawyer, called on Emanuel and Chairman John Ring to recuse themselves from settlement discussions in the McDonald’s case. Ring did not participate.

The NLRB’s Office of the General Counsel sued McDonald’s in December 2014, arguing that it should be on the hook for its franchisees’ alleged labor law violations. Richard Griffin, the Obama-appointed general counsel, argued that McDonald’s was a joint employer because, among other things, it kept close track of the activities of franchisee employees through a computer system.

According to a report Thursday by Bloomberg, tactics that were “discussed by and, at times, coordinated by regional executives” of McDonald’s Corp. included anti-union activities such as “gathering intelligence from a cashier who attended a union meeting as a mole, circulating names of suspected pro-union workers, and coaching a franchisee on how to avoid hiring union sympathizers.”

After the board transitioned to Republican control under the Trump administration, the NLRB’s Trump-appointed general counsel, Peter Robb, requested a pause in the trial to explore a settlement amid a firestorm over the NLRB’s December 2017 ruling in Hy-Brand Industrial Contractors, which overturned the less business-friendly definition of joint employment established in the NLRB’s 2015 Browning-Ferris ruling. Emanuel’s participation in Hy-Brand, which the board withdrew in February 2018, led to calls for Emmanuel’s resignation from congressional Democrats, including Sen. Elizabeth Warren(D-Mass.).

It also prompted an internal review 0f the agency’s ethics procedures that was released last month. In that report, the NLRB gave itself a clean bill of health and gave board members considerable latitude to decide for themselves whether they had a conflict of interest.

McDonald’s initially submitted the settlement agreement in March 2018. The NLRB, in an unusual press release, touted that as a “full remedy.” But lawyers representing the fast-food workers disagreed, noting that the settlement failed to identify any wrongdoing by McDonald’s. Administrative Law Judge Lauren Esposito rejected it in July 2018, arguing that it was not a “reasonable” solution given “the nature and scope of the violations alleged and the settlements’ limited remedial impact.”

The NLRB general counsel then appealed that ruling, placing the settlement agreement before the Trump-appointed board.