McDonald’s employees have sued several franchisees as well as McDonald’s Corp. and McDonald’s USA in seven separate cases alleging the brand of “systematically stealing wages” by failing to pay overtime or asking crew members to work off the clock, among other claims.
All seven lawsuits, including four in California, two in Michigan and one in New York, are seeking class certification or collective-action certification. Five of the suits name McDonald’s franchisees as defendants, along with McDonald’s Corp. and McDonald’s USA LLC, both of which are based in Oak Brook, Ill.
The franchisor is the sole defendant in two other suits for alleged violations at company-owned restaurants. However, the cases in total bring up the concept of “vicarious liability,” in which national brands could be considered joint employers with their franchisees, exposing them to liability for any alleged wrongdoing at an owner-operator’s store.
“If the plaintiffs are successful, then it really calls into question every franchise system that’s out there,” said Dennis Wieczorek, a Chicago-based partner with DLA Piper who heads the firm’s franchise law group. “Theoretically that could mean that the franchisor becomes jointly responsible for every kind of labor law in employment, like wage-and-hour [laws], workers compensation or any kind of harassment that occurs at the [franchised] restaurant.”
He added that vicarious liability is “foreign to the concept of franchising,” because the national brand does not set the terms and conditions of employment for workers in a franchised unit.
“This issue is not about how you cook the burger or how you present the brand to the public,” Wieczorek said. “This is about day-to-day operations that the franchisee is in charge of.”
The four suits in California collectively list 13 named plaintiffs, while the two Michigan suits have eight plaintiffs and the New York case names six, according to the plaintiffs’ lawyers who held a press conference Thursday.
“McDonald’s and our independent owner-operators share a concern and commitment to the well-being and fair treatment of all people who work in McDonald’s restaurants,” Heidi Barker Sa Shekhem, the company’s vice president of global external communications, said in a statement. “We are currently reviewing the allegations in the lawsuits. McDonald’s and our independent franchisees are committed to undertaking a comprehensive investigation of the allegations and will take any necessary actions as they apply to our respective organizations.”
The four cases in California, one of which was filed only on behalf of workers in company-owned restaurants, allege that McDonald’s workers were denied all promised wages for work done on or off the clock, denied overtime pay, and denied timely rest and meal breaks.
The two Michigan suits were brought against McDonald’s franchisees in the Detroit area, alleging that the cost of required McDonald’s uniforms were deducted from employees’ paychecks, supposedly in violation of state law. The cases also allege that the McDonald’s franchisees adjusted the reported number of hours worked or had crew members work off the clock to avoid paying overtime.
The lead attorney in the Michigan cases, Edgar James of Washington-based James & Hoffman PC, said the franchisor was implicated in the alleged wage violations through its requiring franchisees to use labor-scheduling software that notifies the operators of their labor costs in real time, which led to those operators supposedly taking their workers off the clock when the labor cost approached certain thresholds.
Cases not meant to undermine franchising
The New York lawsuit was brought against McDonald’s Corp. and McDonald’s USA for failing to pay specific amounts of wages required by New York State law to provide for the employees’ regular washing and maintenance of required uniforms.
The attorneys representing the plaintiffs said Fast Food Forward, a group that has organized more than 100 strikes of quick-service workers across the country in the past year, connected some of the McDonald’s employees involved in the suit to their lawyers.
Joseph Sellers, the plaintiffs’ attorney in the New York case, said McDonald’s Corp. either allegedly perpetrated the “wage theft” claimed in the seven cases or knowingly tolerated the actions in the five suits brought against franchisees. The franchisor’s involvement was implied not just through use of the labor scheduling software, but also through its use of the company’s business consultants that inspect and advise owner-operators, he said.
Sellers added that no similar suits are coming for other large restaurant franchisors.
“These cases aren’t being brought to undermine franchising per se,” Catherine Ruckelshaus, program director for the National Employment Law Project, added during the press conference. “If you’re going to engage in franchising or some other form of subcontracting, you need to make sure you’re doing it responsibly. If McDonald’s continues to engage with low-capitalized franchisees and impose these restrictions, it can’t do so without being responsible for any violations that might result from that.”
Yet franchise lawyer Wieczorek of DLA Piper argued that setting a precedent of vicarious liability would cause franchisors to say even less about employment to their franchisees and provide less support, which would only harm the operator’s chances of complying with the law.
“A franchisor that might make suggestions to a franchisee might start saying, ‘We’ll just stay away,’ and that doesn’t serve any public purpose,” Wieczorek said. “It just means the franchisors will stay away from an entire area of the business and say, ‘Do what you want.’”
McDonald’s operates or franchises approximately 35,000 restaurants in more than 100 countries, including more than 14,000 locations in the United States.