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Franchise Employees Sue McDonalds USA, LCC

Published by on February 20, 2015

McDonalds USA, LLC is again under fire for the alleged actions of its franchisees.  A little more than a month as passed since the National Labor Relations Board filed complaints against McDonalds as a putative joint employer allegedly involved in franchisee reprisals against franchise employees who were protesting their wages and working conditions. On January […]

McDonalds USA, LLC is again under fire for the alleged actions of its franchisees.  A little more than a month as passed since the National Labor Relations Board filed complaints against McDonalds as a putative joint employer allegedly involved in franchisee reprisals against franchise employees who were protesting their wages and working conditions.

On January 22nd, former employees of Soweva Co.’s McDonalds franchises in South Boston and Clarksville, Virginia filed a complaint against Soweva and McDonalds as joint employers for race and sex discrimination.

The plaintiffs alleged that Soweva’s supervisors instituted a plan to reduce the number of African-American employees and replace them with white employees. The complaint stated that Soweva undertook this plan in order to keep an even ratio of African-American and white employees at its restaurants, and that the current ratio was off-balance in favor of non-white workers.

While the complaint did not allege that McDonalds was directly involved in Soweva’s activities, it alleged that McDonalds was a joint employer because it controlled almost every aspect of franchise restaurant operations. These aspects included the control of menu items and food preparation, the required use of a business manual mandating “operations procedures, bookkeeping and accounting procedures, business practices and . . . personnel management” and the control of all advertising, restaurant manager training, restaurant cleanliness requirements and standards for franchisee employment policies.

The employment policies allegedly included hiring standards, harassment and discrimination policies and employee work assignments.

Laconic Lookout: Companies providing franchise opportunities should be on guard for potential joint employer suits. The NLRB is planning to revise its joint employer test, and this will only make franchise relationships more susceptible to joint employer actions. Franchisors must clearly delineate between business operations and employment operations when preparing franchise agreements and policies. Provisions that give the franchisor too much authority or involvement in franchisee staffing decisions and employee management could result in a joint employer claim.

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