McDonald’s Ruled a “Joint Employer”

Big news for workers’ rights today. The National Labor Relations Board has ruled McDonald’s a “joint employer.” This basically invalidates the claim used by fast food corporations that franchise out the stores that they are not responsible for what happens to the workers. Of course this is going to be challenged, but it opens up an attack on one of the ways corporations protect themselves from liability while undermining workers’ rights. The ability of workers to, say, sue McDonald’s for the bad working conditions of their stores would be a major gains in labor rights.

Lydia DePillis wrote on the potential of this decision a couple of weeks ago:

That may be true of some franchise models. In the case of McDonald’s, though, advocates argue that the fast-food giant’s franchise agreement and actual business practices are so restrictive and pervasive that franchise owners have little latitude with their staffing arrangements and no choice but to keep labor costs as low as possible. In a somewhat unusual arrangement, McDonald’s even controls its own real estate and extracts exorbitant rents from its franchisees, who are on the hook for expensive renovations. All that has driven profit margins down to the point where former McDonald’s executive Richard Adams, now a consultant, estimates that about a quarter of franchises don’t even generate positive cash flow for the owner. That doesn’t give them many options.

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It’s not just fast food, though: The Browning-Ferris decision could impact janitors, nurses, assembly-line techs, clerical workers, you name it. But what does having a joint employer look like in practice? How do you bargain with two bosses at once?

For the closest example of how this might work, look to show business, says Catherine Fisk, a law professor at the University of California at Irvine.

The big movie studios, after all, haven’t directly employed the people they depend on — like writers, set designers and lighting techs — since the 1940s. But they all know they have to deal with the unions that represent them, which set standard rates for their services. “You get access to all that labor, but you’re going to pay minimum terms,” says Fisk. “People who work in Hollywood recognize that if they all start working for half as much, writers won’t be able to pay their mortgages.”

Things could work similarly in other types of service industries, if it were clear that a large employer couldn’t just pick the contractor that agreed to provide labor for cheap.