Senate Democrats were denounced by a major association of franchise businesses Thursday for trying to end settlement talks in a major labor dispute case against McDonald’s.
McDonald’s has been fighting back against legal challenges which allege the company is responsible for the labor law violations of its franchisees. It was one of the main legal challenges that was intended to bring about a controversial update to what is known as the joint-employer standard. But the fight has recently turned to settlement talks.
Democratic Sen. Elizabeth Warren issued a letter alongside four other senators asking federal officials to allow the trial to proceed so that a judge can have the chance to actually rule on it. The International Franchise Association (IFA) condemned the letter as inappropriate.
“It is completely inappropriate for sitting U.S. Senators to influence or intervene in a settlement being negotiated between private parties through an independent government agency,” IFA public affairs vice president Matt Haller told InsideSources. “Their attempt to do so raises questions about whether there’s a broader political motivation at play here.”
Former President Barack Obama oversaw many changes to labor law during his time in office. The National Labor Relations Board (NLRB) brought about one of the more significant reforms by updating the joint-employer standard – which determines whether an employer is legally responsible for the employees of a company it contracts with.
Those in support of the new standard called it a needed update that prevented employers from sidestepping their responsibilities. Critics denounced it as a burdensome and unclear standard that hurt both employers and workers. President Donald Trump coming into office has brought a shift away from the updated standard.
The McDonald’s case was one of the main legal challenges intended to bring about the updated standard. The franchise model was particularly at risk under the new standard since it involves large brand names contracting with smaller companies. A case involving Browning-Ferris Industries set the precedent for the new standard when it was decided in 2015.
McDonald’s was unlikely to get declared a joint-employer under the previous standard because it required that a company have direct control over the employment policies of another business. The Obama-era update, however, made it a lot easier to declare a company a joint-employer by basing the standard on indirect control.
The NLRB last year overruled the precedent it set just a few years earlier in a case involving Hy-Brand Industrial Contractors. The decision was a major win for critics of the Obama-era standard – until it was overruled again. The NLRB decided to vacate the decision Feb. 26 over a conflict of interest involving board member William Emanuel.
Sen. Warren and the other lawmakers argue in their letter that the trial should continue given the recent developments. NLRB General Counsel Peter Robb previously argued that settlement discussions were necessary because the Hy-Brand decision upended some of the allegations against McDonald’s.
“The Board’s abandoning of Hy-Brand eliminates whatever support may have existed for your efforts to settle the McDonald’s case so near to the trial’s close,” the letter stated. “Because this matter affects the rights of millions of workers and has implications far beyond the scope of the case, we will closely follow how you proceed.”
McDonald’s has been facing hundreds of allegations that it unlawfully harassed and fired workers who were organizing for higher wages. Those opposed to the challenges argue the older standard should apply since many of the complaints come from the independently owned businesses that contract under the McDonald’s brand name and not the corporation itself.
The NLRB decision drew considerable attention with the change being so drastic. The business community and other critics denounced the updated standard as a dangerous overreach of federal powers that went beyond what the law intended. They also argued the updated standard created a lot of uncertainty for businesses because it was so vague.
Republican Rep. Bradley Byrne introduced legislation intended to clearly define what determines the joint-employer standard. The legislation is written to ensure future administrations can’t make such dramatic changes again. It is also written to fix an even greater underlying problem which has allowed for a patchwork of legal interpretations.
The Fight for $15 movement held protests against the settlement talks March 2 outside regional NLRB offices in a handful of major cities.
