Is the McDonald’s Corp. responsible for how fry cooks and cashiers are treated in its thousands of restaurants across the country, or are those matters simply up to the discretion of the franchise owners that operate 90 percent of the company’s establishments?
It’s no trifling question, as a new lawsuit makes apparent. Ten former employees of McDonald’s in Virginia — nine African-Americans and a Latino — have filed a federal civil rights case against the corporation and a franchise owner over what they allege was racial harassment and racially motivated firing.
The suit claims that supervisors complained “there are too many black people in the store,” and that they called African-American workers “bitch,” “ghetto” and “ratchet.” The Hispanic worker alleges she was called “dirty Mexican.”
After a hiring fair brought in white workers, the 10 employees were let go in a mass firing. The lawsuit also claims a supervisor sent female employees sexual photos and touched workers inappropriately.
As any employment attorney could tell you, sexist, racist and just plain vile antics are alive and well in the American workplace. (So, too, are fabricated allegations. It’s a two-way street.) What makes this case noteworthy is that it may help pierce the cordon sanitaire that has protected McDonald’s from liability in such cases and, more significantly, insulated it from union organizing in its restaurants.
Last year, the National Labor Relations Board found that McDonald’s is a joint employer along with its franchise holders. That opened the door to the Virginia suit.
If the plaintiffs in the present case succeed, it portends much bigger woes for not only McDonald’s but other companies operating on the franchise model and employing large numbers of minimum wage workers.
McDonalds’ corporate retains ownership of the stores and rents them to the franchise owners. The corporation demands strict adherence to manuals full of rules that dictate how every morsel is served, how advertising is used, and minute details of other day-to-day business operations, including training on hiring and firing. Managers are sent to Hamburger University, and mystery shoppers are used to check how customers are treated.
Where the line in the heavy oversight is drawn is when problems arise. The fired McDonald’s employees say that when they contacted McDonald’s corporate to dispute their firing and report the name-calling, they received no response or were sent back to the franchise owner — in other words, to the source of the alleged misconduct.
A keenly interested observer of this case is the Service Employees International Union (SEIU). The union is looking to expand its membership by organizing fast-food workers. In the labor board’s joint employer decision SEIU likely sees an opportunity to organize McDonald’s workers on a national level — a far cry from the exponentially more labor-intensive efforts that would be required to organize franchise by franchise.
Catherine Ruckelshaus, general counsel of the National Employment Law Project, put it succinctly in a statement after the labor board’s landmark decision: “If you work at McDonald’s, then you work for McDonald’s, and not just the company’s franchisees.”
From McDonald’s perspective, the corporation/franchise distinction is necessary to limit the risks that come with having low-wage, low-benefit employees. This is a common enough tactic in the corporate world. In some fields of business, that means hiring subcontractors. Fast food uses franchise agreements where royalties are paid to corporate, but responsibility for complaints is shoved downward to stores.
Yet employees, guided by unions and labor advocates, are becoming savvier about publicizing their grievances and demand for better wages and conditions. In the last few years they have launched a high-profile campaign for a $15 hourly wage. Activists targeted several McDonald’s restaurants for brief “strikes” and other protests, and were met with union-busting tactics, which are also under investigation by the labor board.
While the campaign to, in effect, double fast-food workers’ wages occasioned a lot of scoffing and derision in some quarters, it also tapped into a growing public sentiment that a low-wage, low benefit future is becoming a more palpable threat to people who once felt more economically secure. The employment recovery, after all, has mostly been thanks to growth in “McJobs” — low-skill, dead-end jobs in fast food.
The labor board’s “joint employer” decision is far from settled. Some expect McDonald’s will fight it all the way to the Supreme Court if needs be — where, no doubt, it would get a more sympathetic hearing from the conservative majority. For now, though, McDonald’s certainly has a new menu of concerns.