Will The Obama NLRB Kill The Golden Arches’ Golden Opportunities?

Ken Sondik Attorney
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McDonald’s announcement that it will increase starting pay to $1 above minimum wage at company operated restaurants has not, of course, stopped the Service Employees International Union (SEIU) and its liberal allies from continuing to wage jihad on the brand.

First, McDonald’s and over 3,000 U.S. owner/operators deserve a shout-out for providing the life and work skills that numerous individuals have used as a springboard to productive careers.

Exhibit A is the McDonald’s system, where supersized career advancement opportunities have been a mainstay since Ray Kroc founded the Company in 1955. Most restaurant managers begin at crew level. Even about half of McDonald’s corporate officers got their start as part of a McDonald’s crew.

McDonald’s English Under The Arches program deserves special recognition. Aimed at manager/leadership potential Latino immigrant employees struggling with English, this innovative ESL program features virtual classroom sessions workers participate in from their McDonald’s job site—quite useful for employees with other job or family commitments.

The program, which has received a Literary Leadership award from the National Coalition of Literacy and other accolades, has expanded into 16 regions and graduated 3,000 students since starting as a 2007 pilot.

According to McDonald’s, 96 percent of graduates receive pay increases and 76 percent are still employed by McDonald’s or an owner/operator four years later.

Other educational opportunities are available to workers, including a high school diploma program and tuition assistance for employees pursuing a business degree.

Minimum wage hikes, a liberal not-so-special sauce that Democrats want to force on fast food operators and other job creators, is a proven recipe for fewer jobs. Even a 2014 Congressional Budget Office Report prepared by a Democrat-appointed Director concluded that Barack Obama’s proposal to raise the minimum wage to $10.10 would eliminate half a million jobs.

And the jobs killed by minimum wage increases tend to be the unskilled, low wage variety — exactly the kind that workers at the bottom of the economic ladder need in order to get the skills that will allow them to earn larger paychecks.

It’s also known that the majority of minimum wage workers earn a raise within one year in any case.

Speaking of wages, the slogan of SEIU’s two and one half year campaign against McDonald’s is “fight for $15”, as in $15 per hour for entry-level fast food workers. At bottom, the fight is about union power. To survive, SEIU needs paychecks to siphon.

All well and good, as long as the government acts as a neutral referee. Which is not, alas, the case here.

Richard F. Griffin, Jr., the Barack Obama appointed National Labor Relations Board (NLRB) General Counsel, announced in December that McDonald’s will be listed as a joint employer with independently owned and operated franchises named in NLRB complaints alleging unfair labor practices.

The complaints arise out of the SEIU organized protests and walkouts wherein some of the independently operated McDonald’s targeted in SEIU’s campaign fired employees who walked off the job to participate in the events, which SEIU and the General Counsel contend amounts to illegal “retaliation”.

Business people and attorneys involved in a raft of franchise based businesses have complained that treating a franchisor as one and the same with its franchisees disregards the parties’ contractual rights and legal precedent — franchising agreements spell out that each party is a separate and independent entity, and efforts to paint a franchisor as a joint employer have been consistently rejected by courts.

Mr. Griffin’s only explanation was a press release stating that McDonald’s “through its franchise relationship and its use of tools, resources, and technology, engages in sufficient control over its franchisees’ operations . . . to make it a . . . joint employer”.

Comments in a brief filed by his office in Browning-Ferris Indus. of California, Inc., a non-franchising case, which have been echoed in speeches by Mr. Griffin, indicate that the pretext is McDonald’s provided software which helps franchises schedule workers across different shifts in the most efficient manner possible. The technology also gives McDonald’s detailed data relative to each franchise.

The notion that McDonald’s is transformed into a joint employer by technology which allows franchised restaurants to schedule workers efficiently and also gives McDonald’s comprehensive data as to labor costs at these independently operated entities is a half-pound short of a Big Mac. The deployment of such software merely shows that McDonald’s and franchises have a joint interest in seeing restaurants succeed.

The franchise, not McDonald’s, is still hiring and firing workers, training and supervising them, setting wages, and otherwise running the business on a daily basis.

The press release also stated that McDonald’s response to SEIU’s nationwide actions against franchisees “further supports” the joint employer designation, referring here to coordination between McDonald’s and the targeted franchises in responding to SEIU’s multimillion dollar national campaign. McDonald’s, in other words, should stand pat while SEIU and its allies barrel bomb its brand.

The joint employer designation certainly puts the world’s largest burger brand in a pickle. McDonald’s would be liable for any violation of a worker’s rights at independently run franchises, and the NLRB could mandate bargaining/voting units extending beyond specific stores to regional areas or beyond — even though the workers would be employed by unrelated and independently operated entities.

McDonald’s would appeal these rulings to Federal Court but fully unwinding some NLRB actions would prove difficult.

Before arriving at the NLRB, Mr. Griffin was employed by the International Union of Operating Engineers, including as its Associate General Counsel. It’s not known whether he cross-trained on the big machines operated by rank and file, though steamrolling over contract rights in order to pave the way for union organizing is probably more satisfying for a union lawyer anyhow.

The NLRB hearings were set to reconvene in late May after opening on March 31 but were recently continued over McDonald’s’ objection until October.

Don’t count on McDonald’s getting a fair shake. The NLRB’s pro-union tilt as of late is well-documented, and the NLRB employed Administrative Law Judge assigned to the case, a former union lawyer herself, has consistently sided with Mr. Griffin’s office on a variety of critical pretrial issues.

New CEO Steve Easterbrook is showing bold leadership in addressing McDonald’s two year sales slump. But as Richard Griffin’s joint employer union play shows, the real threat to the Golden Arches’ golden opportunities might not be marketplace competition, but “progressive” government.