NLRB Case against McDonald’s Shows Need for Labor Law Reform

At the beginning of the month, the National Labor Relations Board and McDonald’s trial began. The case will determine whether McDonald’s is a joint employer and responsible for alleged unfair labor practices at a number of independently owned restaurants across the nation.

The case started back in 2012 when unfair labor practice charges were filed against McDonald’s. As the NLRB is part of the “most transparent administration in history,” it requires a Freedom of Information Act to see them. Although the public cannot see the documents, it is known that the charges are connected to alleged action taken by franchisees in response to the union-funded Fight for $15 smear campaign against McDonald’s franchises in various states.

Fast forward to 2014, when NLRB General Counsel Richard Griffin unilaterally consolidated dozens of unfair labor practice charges against McDonald’s franchisees and named McDonald’s USA LLC as a joint employer, making it responsible for the alleged labor violations of the independently owned fast food restaurants.

In another example of the lack of transparency that defines the Obama administration, General Counsel Griffin refused to explain his legal reasoning behind labeling McDonald’s as a joint employer.

This highlights one of the major concerns of the makeup of the NLRB, which go as far back as the Taft-Hartley reform of the National Labor Relations Act in 1947. As former NLRB General Counsel Ronald Meisburg recently noted in a blog post, “The general counsel of the National Labor Relations Board is imbued by statute with unreviewable ‘final authority’ with respect to the investigation of unfair labor practice charges and the issuance of complaints.”

This vast power allow the NLRB general counsel to target political opponents, which is what is being done to McDonald’s. And General Counsel Griffin does not even hide his motives for aggressively pursuing the case against McDonald’s. At an American Bar Association forum, Griffin said the “sole” reason the agency is taking on the case is because of the Fight for $15 campaign. The NLRB attack against McDonald’s and the franchise model is simply a ploy to ease union organizing.

This week, the NLRB further showed it is in the tank for Big Labor. Bloomberg BNA reported on March 18, “An administrative law judge acted within her discretion in denying McDonald's USA LLC's efforts to subpoena documents from unions and other groups that were involved in a protest campaign against the national restaurant chain.”

The NLRB board members agreed with the administrative law judge’s claims that the motives behind the union-funded campaign couldn’t establish a defense for McDonald’s and the subpoenaed information was not relevant to the case.

That is rich. The NLRB delayed the trial from taking place for years. Why? Because it was waiting for courts to demand McDonald’s comply with its subpoenas, which McDonald’s considered irrelevant to the case. In the end, the NLRB discovery cost McDonald’s $1 million from producing over 100,000 documents to the general counsel.

Unfortunately, if the NLRB determines that McDonald’s is a joint employer, it will have far-reaching implications. Applying the Board’s expanded joint employer standard to franchises could expose thousands of businesses across the United States to increased costs and liability. Additionally, the decision will block a path toward entrepreneurship, reduce job creation, expand employer liability, increase employment insurance costs, lead to a surge in lawsuits, and disrupt thriving business models.

As explained in one article, it can feel like “an ax hanging over” an independent franchise owner’s head. Franchise owners like Matthew West, a partner at FastSigns franchises, a visual communications company, say, “If I had to decide to start a franchise business this year vs. last year with the uncertainty out there now, I would have a hard time deciding to start this year.”

With millions of American workers on the sideline, now is not the time for the rogue NLRB to hamper job creators with unwarranted liability. It is hard enough to get a job and Americans don’t need the NLRB making it harder than it already is.

Hopefully, Congress and the next president will take a long look at the NLRB and determine that the agency no longer acts as constructed—a federal agency that represents the public interest in labor disputes. Labor law is overdue for reform. Abolishing the NLRB would be a good start.