POLITICO Pro is reporting on a couple of interesting cases developing out the restaurant industry. One is a potential joint employer settlement between McDonald’s and the NLRB. The other an odd case where a judge holds a Chipotle worker to be in contempt of court over a suit filed under the Obama administration’s overtime rule.
McDonald’s submitted a settlement with the NLRB general counsel to the administrative law judge presiding over its joint-employer case, according to two sources close to both sides in the case.
The NLRB’s Office of the General Counsel sued McDonald’s during the Obama administration, alleging it was jointly liable for the firing of McDonald’s workers employed by its franchisees. But in January a new Trump-appointed general counsel requested a pause in the trial to explore a potential settlement.
Matt Haller, the chief lobbyist for the International Franchise Association, confirmed that McDonald’s submitted its proposed settlement to the court this morning, as did a person close to the workers’ side. The NLRB did not immediately respond to requests for comment.
McDonald’s pushed to settle after the board overturned the Obama-era board’s joint employer standard in December, making it harder to hold the company liable for labor violations committed by its franchisees. But the board withdrew that pro-business decision in February after the NLRB’s inspector general said that William Emanuel, a Trump appointee, shouldn’t have participated due to a conflict of interest.
The fast-food company presented the settlement “as a done deal,” according to the person close to the workers, “but the judge was very clear it’s not done until she says so.” Administrative law Judge Lauren Esposito gave the charging parties 24 hours to decide how much time they need to prepare for a hearing on the settlement.
Pro-business groups are pushing to include a joint employment fix in the omnibus bill expected to come out tonight. Their bill, H.R. 3441 (115), would codify the more pro-business joint employment standard into law.
“The McDonald’s case does nothing to settle the uncertainty for franchisers and franchisees and address the broader question of joint employment,” Haller said.
A federal judge in Texas today held a Chipotle worker in contempt by bringing a suit against the Mexican restaurant chain for back pay under the Obama administration’s overtime rule.
The worker filed a lawsuit against Chipotle last year, arguing that the company withheld time-and-a-half pay under the Obama administration’ rule, even though the rule never took effect because the same court issued an injunction. Attorneys for the worker argued that their lawsuit wasn’t a violation of the court’s order because the court, in issuing an injunction against enforcement, didn’t stop the rule itself from taking effect. They also argued the federal injunction didn’t stop lawsuits under state law.
The judge didn’t agree with that argument and ordered the worker to withdraw the complaint and pay Chipotle’s legal fees.
The Obama overtime rule has been injuncted, but it has played havoc with many employers, perhaps none more so than Chipotle Mexican Grill.
According to Politico Pro, Chipotle requested today that a federal court in Texas proceed with a scheduled hearing on the company’s motion for contempt against workers who alleged they were owed overtime.
The workers sued Chipotle in June, arguing that the company withheld time-and-a-half pay from them under the Obama administration’s rule, even though the rule never took effect because the same Texas court issued a preliminary injunction against it in November. In response to the lawsuit, Chipotle requested that the court hold the workers in contempt.
In August the court made its temporary injunction permanent and denied all pending motions, including Chipotle’s motion for contempt. But in a letter, Chipotle said “this Court’s recent rulings have not obviated the need for this proceeding,” and noted that the workers’ case was continuing in New Jersey. Chipotle requested that the hearing “proceed as scheduled on September 28.”
Via Politico Pro, for our restaurant industry members, or those interested in restaurant industry news, and for those interested in overtime regulations and legal issues. This is an unusual case in which an employee class action lawsuit was filed against Chipotle for failing to comply with the new overtime regulations put in place during the last days of the Obama administration, even though the implementation of said regulations was barred by an injunction.
A Texas district court scheduled a hearing today on Chipotle’s motion for contempt against workers who sued the company for failing to comply with the Obama administration’s overtime rule, even though the rule never took effect.
Last year, the same Texas court issued an injunction against the rule. But the Chipotle workers argued that the injunction applied only to the Labor Department and not to private parties. Chipotle disagreed. In its motion for contempt filed Tuesday, Chipotle said that the court “possesses the inherent authority to enforce its own injunctive decree and to punish those who disobey it.”
The hearing will take place Aug. 17 at 8 a.m. at the Paul Brown United States Courthouse in Sherman, Texas.