McDonalds and Franchisees Called Joint Employers Equally Responsible for Employees: The Implications

'Freedom's just another word for nothing left to lose,' as Janice Joplin was fond of singing. In the contingent, part time free lance economy, that is often, quite literally, true.

So the ruling by the National Labor Relations Board that McDonald's is a 'joint employer' along with its franchisees is an historic ruling.

Increasingly, those enterprises we think of as employers are not technically that: their name may be on the product or service that is sold but the work being done is by people who are actually employed elsewhere. Which is to say by contractors established specifically to deflect the accountability, cost and risk that comes from paying someone.

The contracting entities are rewarded by the client company with funds that might otherwise have gone to raises or benefits so that the client can focus on core competencies like tax avoidance. Ok, a bit snarky, but not inaccurate.

The NLRB's ruling is significant in the context of those covering the intellectual property rights of amateur athletes. It could affect not just fast food workers, but coders, production workers, creatives and virtually anyone else. The implication is that it may be evidence of a larger movement towards readjusting the risk-reward ratio between corporations and their customers and/or employees. JL

Seth Michaels reports in Talking Point Memo:

More and more, work is separated from the companies that benefit from it, through layers of contingency, subcontracting, freelancing and franchising. That makes it harder, by design, to know who’s accountable for how people get treated and how they get compensated.

Low-wage workers — and everyone else who has a job — got some pleasant surprises from the Obama Administration this week.
On Tuesday, the general counsel of the National Labor Relations Board announced that McDonald’s could be treated as a “joint employer” in labor cases. That may sound like a small administrative matter, but it’s actually a big deal — and a big win for workers at McDonald’s and beyond.

[T]he world's biggest hamburger chain could be named as a joint employer in several complaints regarding worker rights at franchise-owned restaurants. The decision is pivotal because it could expose McDonald's Corp. to liability for management practices in those locations.

The National Labor Relations Board said 181 cases involving McDonald's have been filed since 2012. For the 43 cases that were found to have merit, the board said McDonald's or its franchisees will be named as respondents if the parties fail to reach a settlement.

Alec MacGillis writes that this means that the treatment of McDonald’s workers is now the responsibility of McDonald’s itself.

[F]ast-food chains like McDonald’s have been able to hide behind the veil of the franchise model, disavowing responsibility for what happened inside restaurants. Worker advocates have long argued that this was a charade, given the strict terms that the company dictates to its franchisees.

The companies behind fast-food franchises prefer to stay far back from debates over workers’ rights. It’s much easier for them to cast these disputes as small and localized, occurring entirely between a small set of workers and a franchise operator. (It’s the same idea behind Wal-Mart’s strategy of having sub-contractors run their warehouses, or trucking companies classifying their drivers as independent contractors.)
The decision doesn’t come out of nowhere. The NLRB cases and the heightened scrutiny of McDonald’s have emerged out of a years-long fast food worker movement seeking better wages, better conditions and the right to organize.
Fast food employees have taken part in multiple strikes and actions for higher wages, including protests in November 2012, April 2013 and May of this year. Sarah Jaffe, who has covered this movement extensively, points to the impact of low-wage worker organizing in winning a higher minimum wage and sick days in New York — real, concrete wins that help people across industries.
In a smart piece, Jaffe argues that the press often talks about fast food workers in a way that walls them off from their readers — we “talk about them as though they are not us,” she says.

The perceived class difference between a bank worker in a suit and a fast-food worker in a logo baseball cap evaporates when the rent comes due, and many of us know what it’s like to do the math of monthly bills and find you’re coming up short.

The fast food workers’ movement is saying something that’s important whether or not you’re operating a grill or a cash register or a mop bucket. They’re raising the question of what we all should be able to expect from a boss and a workplace.
It’s taken real organizing, by people who are risking their jobs, to get us here.
This is a vivid, vivid example of why the filibuster reform fight mattered. The NLRB requires a quorum to make decisions, and NLRB members, as well as the board’s general counsel, require Senate confirmation. The long-standing filibuster blockade of NLRB appointees by Senate Republicans had the effect of nullifying labor law entirely. Now, with a board in place, fast food workers get a chance to make their case. That’s not radical, it’s what they’re entitled to under the National Labor Relations Act — which, it bears mentioning, is explicitly designed for “encouraging the practice and procedure of collective bargaining.”
Meanwhile, the administration will release an executive order today that will set new standards for millions of jobs at companies that take on federal contracts. It’s a great way to create incentives for companies to treat their workers better. This, too, has come out of a sustained campaign of low-wage worker organizing.
Improving America’s jobs will require special attention to low wage jobs, because the post-recession job market is weighted more heavily down the income scale. As Annie Lowrey reported, a study by National Employment Law Project showed that:

The deep recession wiped out primarily high-wage and middle-wage jobs. Yet the strongest employment growth during the sluggish recovery has been in low-wage work, at places like strip malls and fast-food restaurants. In essence, the poor economy has replaced good jobs with bad ones.

The study pointed to:

…[E]specially strong growth in restaurants and food services, administrative and waste services and retail trades. Those industries — which often pay wages at the federal minimum — accounted for about 40 percent of the increase in private sector employment over the past four years.

The numbers of these kinds of jobs that are growing the unemployment rate falls — so efforts to make jobs like these better are essential to having an economy that functions for more than just the upper reaches.
More and more, the kind of work Americans do is separated from the companies that benefit from it, through layers of contingency, subcontracting, freelancing and franchising. That makes it harder, by design, to know who the boss is — who’s accountable for how people get treated at work and how they get compensated. The fast food worker movement has earned a big win by creating new pressure for accountability.