McDonald's Just Suffered Another Big Blow

August 27th 2015

Thor Benson

On Thursday, workers at companies like McDonald's won a huge victory after the National Labor Relations Board (NLRB) announced that it's expanding its joint employer standard to make it so the parent corporation is a joint-employer with franchisees. That means that workers employed by McDonald's franchisees, for example, can collectively bargain with McDonald's corporation for better working conditions or wages. Before this ruling, workers at franchises would have had to individually negotiate with each franchise owner.

About 750,000 McDonald's employees—90 percent of its workers—are employed at franchised-owned restaurants. The company is currently struggling. It replaced its CEO earlier this year after 2014 was one of its worst years in decades.

"The decision is long overdue," Thomas Kochan, a professor of Work and Employment Research and Engineering Systems at MIT, told ATTN:. He said the decision reflects "the reality of how work is organized and controlled today through a network of organization." It also demonstrates "a return to enforcing the original intent of the NLRB to provide employees with an ability to negotiate with the employer[s] that determines key aspects of their wages, hours, and working conditions."

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What this means.

Many employees of the nation's largest corporations gain employment through franchises, subcontractors, and staffing agencies. These employees have been technically employed by those specific entities in many cases, instead of being directly employed by the larger corporation. For example, a McDonald's employee at a franchise has been considered an employee of that franchise only—not necessarily the McDonald's corporation.

Separating the direct employer and the overarching employer may have made sense when there weren't so many major corporations relying on subcontracted labor, but Kochan and many others believe that things have changed. Corporations may have to start taking responsibility for the people they indirectly employ.

"With more than 2.87 million of the nation’s workers employed through temporary agencies in August 2014, the Labor Board held that its previous joint employer standard has failed to keep pace with changes in the workplace and economic circumstances," the NLRB said in a statement.

It's not just McDonald's.

Many corporations, like Amazon, have warehouses nearly fully staffed by temporary laborers, and it has been found that the working conditions in these spaces can be reprehensible. Not only do these people have little job security and low wages, they are often subjected to physical and mental abuse or unsafe working conditions in some cases. The decision by the NLRB will likely be challenged in court cases, and it is unclear how sweeping of an effect it will have, but it could be a significant step toward workers being able to hold these corporations accountable for working conditions and standards. It may also affect companies like Uber and Lyft, which employ drivers as contractors.

The decision "clearly signals the Board’s determination to update its analysis and rulings to catch up with the changing nature of work and employment relationships," Kochan said. He believes it will take a lot more than this action to help slow the downward trend of union membership, but he said it's still a significant step toward increasing workers' ability to collectively bargain.

Some are trying to argue that this decision will hurt franchises and subcontractors overall. "While Congress is away, the NLRB clearly still plays," International Franchise Association President Steve Caldeira said in a statement. "The ruling jeopardizes small employers in numerous sectors and the future viability of the franchise model of doing business, which has been a hallmark of economic growth and small business ownership opportunities for thousands of aspiring entrepreneurs. The ruling also threatens millions of jobs that franchises create across the country."

Unions like the Service Employees International Union have been major players in movements like Fight for $15, as the Chicago Tribune notes. Fight for $15 has seen major victories, including getting a $15 minimum wage passed in Seattle, Los Angeles, and for fast food workers in New York. Policy changes like the one made by the NLRB may increase the amount of coordinated efforts to improve wages and workplaces.

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