McDonald's Corp. wields enough control over its franchisees that it should be jointly responsible for working conditions, according to charges Friday by the U.S. labor board that critics say threaten to upend the fast-food industry.
The National Labor Relations Board's general counsel, who acts as a prosecutor in filing complaints for violations, said he would proceed with 13 cases involving 78 charges against McDonald's, the world's largest restaurant chain, and some of its affiliated local owners.
The charges include disciplining employees, reducing their hours and "other coercive conduct" in response to union organizing in support of a higher minimum hourly wage.
Lisa McComb, a spokesman for Oak Brook, Ill.-based McDonald's, said in a statement that the board's actions "dramatically strike at the heart of the franchise system."
The case is being closely watched by companies and their affiliated restaurants as a potential expansion of how the board defines who is a "joint employer." Including the corporation in the case would make it responsible for how employees at franchises are treated.
"Should the NLRB's decision become permanent it would negatively impact small businesses across the country in a wide array of industries and business formats," Matthew Haller, a spokesman for the International Franchise Association in Washington, said in a statement.
McDonald's has said its franchisees set wages and control local working conditions. Workers said the corporation controls a number of aspects of how local restaurants operate.
"The complaint validates what workers have been saying over and over again -- that McDonald's requires franchisees to adhere to such regimented rules and regulations that there's no doubt who's really in charge," said Micah Wissinger, an attorney at Levy Ratner who brought the case on behalf of McDonald's workers in New York City.
McDonald's and other chains may have to step up policing of franchises and spend more money monitoring stores to prevent labor violations.
Richard Griffin, the board's general counsel, announced in July his intention to bring charges against McDonald's in addition to its franchisees unless the company and the local operators settled their cases.
The step announced Friday reflects a lack of a settlement.
The statement from the general counsel's office said the litigation would begin on March 30, including hearings at three regional labor board offices.
Information for this article was contributed by Leslie Patton of Bloomberg News.
Business on 12/20/2014