The NLRB’s Politically Driven McDonald’s Show Trial

REUTERS/Keith Bedford

Ken Sondik Attorney
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Readers interested in watching a federal agency steamroll contract rights and the rule of law to advance liberal priorities should visit the National Labor Relations Board (NLRB) Region 2 offices in New York City this October.

That’s when testimony in the Agency’s case against a number of McDonald’s franchisees and McDonald’s USA, LLC (McDonald’s) is set to begin.

The labor agency says that franchisees fired employees who participated in the Service Employees International Union (SEIU) campaign to unionize fast food workers or otherwise engaged in unfair labor practices as to them.

“Fight for 15” is the battle cry, as in $15 per hour for entry-level, unskilled fast food work. That means fewer fast food jobs, as the CEO of Wendy’s, Emil Brolick, had the courage to publicly state recently.     

Given that even the Congressional Budget Office under a director appointed by a Democratic Congress, estimated that Barack Obama’s proposed $10.10 minimum wage would kill half a million jobs, SEIU’s wage demand should really be called a proposal to destroy the unskilled labor workforce.     

But the SEIU will take a smaller unionized workforce over a larger non-union dues paying one eight days a week.

The campaign got a helping hand last December, when NLRB General Counsel and Obama appointee Richard F. Griffin Jr. announced that he would begin proceedings against McDonald’s itself — in addition to its franchisees — on the theory that McDonald’s is a joint employer.

The announcement, along with one several months earlier indicating that Mr. Griffin would begin joint employer proceedings unless a settlement was reached, has given franchisors and franchisees a bad case of indigestion.   

For good reason. The understanding that a franchisor and its franchisee are separate entities is black letter law — as is the corollary that the franchisee is its employees’ sole employer. Franchising agreements also spell this out.

Which is why previous efforts to characterize a franchisor as a joint employer — to make it jointly responsible for and accountable to its franchisees’ employees — have failed.                     

The announcement vaguely asserted that “through its franchise relationship and its use of tools, resources, and technology, [McDonald’s] engages in sufficient control over its franchisees’ operations … to make it a … joint employer”.  

A brief filed by Mr. Griffin’s office in Browning-Ferris Indus. of California, Inc., a pending NLRB case, mentions new labor management software that helps franchisees schedule workers and track costs, which software also gives franchisors detailed data on franchisees’ costs, as examples of franchisor controls.

But such software merely shows that franchisors and franchisees have a joint interest in seeing restaurants succeed.

The franchisee is still hiring, firing, promoting, and supervising workers, ordering supplies, arranging workers compensation and liability insurance, finding professional advisors, and otherwise running the business on a daily basis.

The bigger picture here is that owner-contractor, contractor-subcontractor, and other contingent work arrangements have joined consumer driven health care, an unregulated internet, education vouchers, and fracking on the list of things that keep liberals up at night.    

David Weil, a left wing academic who now serves as Obama’s Department of Labor Wage and Hour Chief, let the liberal dogs out with an article on the so-called “fissured workplace,” bemoaning that work done in the olden days by a single integrated employer is now often performed by specialized third party enterprises.  

The solution to the non-problem is more government regulation — no surprise from an administration that is regulating the internet under a 1930’s era law meant for utilities.

Mr. Griffin’s Browning-Ferris brief is littered with fissured workplace references and other left wing source material, including an article coauthored by the AFL-CIO’s general counsel and a piece by the National Employment Law Project (NELP). The brief argues that lead businesses in contingent work arrangements effectively control the labor policies of other businesses by, for instance, dictating the contract price or mandating the services to be rendered, and should thereby be considered a joint employer.

The brief takes a dim view of franchising in general, arguing that a franchisee is just an “intermediary” “insert[ed]” by the franchisor “between it and the workers.”

The stated goal is for employees of a contractor, subcontractor or a temp staffing firm to be able to bargain directly with the business requesting the service or, in the case of franchising, to allow the franchisee’s employees to seek union recognition from and bargain with the franchisor.  

Getting there requires scrapping the Board’s longstanding joint employer test, one which turns on whether an employer has direct and immediate control over essential terms and conditions of employment such as wages, hiring and firing, and discipline. Mr. Griffin proposes a “totality of the circumstances” approach that looks to “the economic and industrial realities of employment relationships” and other malleable factors.  

Other than eliminating highly productive, market-driven business arrangements from the U.S. economy, Mr. Griffin’s proposals are no big deal.   

A decision in Browning Ferris is expected in the next few days. Whatever the ruling, Mr. Griffin still needs a pretext for his fast food joint employer fatwa, and the previously mentioned modern software tools will do.           

Speaking of pretexts, Mr. Griffin’s announcement also stated that McDonald’s response to the union campaign “further supports” the joint employer designation, referring to his contention, as stated in legal filings, that McDonald’s and the franchisees engaged in a “coordinated nationwide” response to the campaign.  

The union assault has featured staged demonstrations at McDonald’s franchisees throughout the country — these often involve protesters entering private businesses shouting “shut it down” and other nifty phrases — paying with pennies during peak hours, and other actions meant to disrupt franchisee operations.  

Left wing PR firm Berlin Rosen is on retainer to help find bodies for the protests and handle the media side.        

Even if McDonald’s did engage in a “coordinated nationwide” response, and Mr. Griffin won’t give details, McDonald’s executives don’t have to sip McCafé Lattes while SEIU and allies barrel bomb the brand.

Meantime, Lauren Esposito, the NLRB employed Administrative Law Judge assigned to the case, has sided with Mr. Griffin on more or less every pretrial dispute. Judge Esposito has allowed Mr. Griffin’s unprecedented consolidation of 195 unfair labor practice charges involving 22 unrelated franchisees scattered across the country into a single proceeding that will bleed the small business franchisees of precious financial resources, denied McDonald’s request for specific facts supporting the joint employer charge to defend itself in court, refused to limit what can accurately be called a limitless subpoena dropped on McDonald’s seeking information on every aspect of its business — while granting petitions to revoke a highly targeted subpoena prepared by the company which sought specific information as to the union orchestrated campaign against it, and other critical pretrial matters.  

The protesters who chant “shut it down” while trespassing on private property have it wrong. It’s not McDonald’s franchisees that need to be shut down. The NLRB is trying to jettison the American franchising system to advance a progressive agenda. It’s time for Congress to pull the plug, one way or another.