An End to the McDonald’s Joint Employer NLRB Litigation
By: Rob Entin
The new General Counsel of the National Labor Relations Board (“Labor Board”), Peter Robb, continues to reshape the agency with his vision. Consistent with his January 2018 promise to consider “settlements of any kind that are not inconsistent with the Act,” the Labor Board has settled unfair labor practice charges brought against McDonald’s USA, LLC (“McDonald’s”) regarding allegations that it should be held liable -- as a joint employer -- for the unfair labor practices (“ULPs”) committed by its franchisees. This litigation involved the consolidation of nineteen ULPs, filed in over a dozen regional offices, alleging that McDonald’s franchisees interfered with their workers’ attempts to improve their terms and conditions of employment, and terminated supporters due to their protected, concerted activity.
This settlement brings to a conclusion the three years of ongoing dispute between McDonald's and the Labor Board. While the settlement has not been publicly disclosed and still must be ratified by the Administrative Law Judge (“ALJ”), it is likely that she will approve the settlement because it provides full restitution to affected employees. Unions and their advocates stated they will be filing objections with the ALJ. They are disappointed by the inclusion of a “non-admissions clause,” where McDonald’s would not need to admit that it terminated employees or harassed them for engaging in the “Fight for $15” collective action.
Some context is required. In December 2017, the Labor Board issued its decision in Hy-Brand, which overruled the joint employer test articulated in Browning-Ferris, and held that two independent employers will be found to be joint employers only where they exercise “direct and immediate” control over the essential terms and conditions of employment. Subsequently, General Counsel Robb requested a stay of the McDonald’s proceedings to determine whether the Complaint allegations were consistent with the holding in Hy-Brand.
Less than two months later, the Labor Board vacated Hy-Brand based on a report from the Labor Board’s Inspector General concluding that Member William Emanuel should have recused himself from considering Hy-Brand since his previous law firm represented a party in the Browning-Ferris case. Per the Inspector General, since Hy-Brand re-examined the Labor Board’s Browning-Ferris decision, Member Emanuel “is and should have been, disqualified from participating” in the decision. The Labor Board has (for now at least) restored the Browning-Ferris joint employer test, which allows the Labor Board to find liability where it is indirect or reserved (even if not exercised) authority to control another employer’s employees’ terms and conditions of employment.
Going forward, employers should be encouraged by the General Counsel’s willingness to settle complicated litigation. Considering that the prosecution of McDonald’s was a priority by his predecessor, its settlement, along with the purported non-admissions clause, bodes well for the resolution of labor disputes without further and expensive litigation.