Push to Settle McDonald’s Case, a Threat to Franchise Model

The Trump appointee charged with enforcing federal labor rights is scrambling to head off a court ruling in a case against McDonald’s that could redefine the accountability of companies for the labor practices of their franchisees.

The official, the general counsel of the National Labor Relations Board, has been exploring settlement terms with workers at the center of the board’s complaint against McDonald’s, according to lawyers involved in the case. A judge had halted the trial until Monday to give the agency a chance to do so.

If no settlement is reached and the judge were to rule against the company, the decision could have enormous implications for the franchise business model, affecting millions of workers in the fast-food industry and beyond. Corporations could be required to bargain with unionized workers at disparate franchise locations.

The National Labor Relations Board did not respond to a request for comment. A McDonald’s spokeswoman said that “settlement discussions are a normal part of any litigation process.”

The case was brought during the Obama administration, when the board was under Democratic control. Since President Trump’s election, Republican members have regained a majority, steering the board away from a pro-labor orientation.

A central question in the trial is whether McDonald’s is a so-called joint employer of workers directly employed by its franchisees. A parent company is considered a joint employer if it controls their working conditions, although the legal criteria for determining control in this context has shifted in recent years.

A finding that McDonald’s is a joint employer would make the company liable for labor-law violations committed by its franchisees, and would require it to bargain with restaurant workers who unionize.

The workers in the case asserted that their bosses at McDonald’s restaurants disciplined them, retaliated against them and in some cases fired them for taking part in protests beginning in 2012 in which they demanded a $15 hourly wage and a union. Roughly two dozen could be owed a monetary settlement, according to a lawyer involved.

The general counsel of the National Labor Relations Board, at the time an appointee of President Barack Obama, investigated their charges and issued complaints against McDonald’s and its franchisees in 2014. A trial began in 2015 and continued through this year.

But in January, the labor board’s new general counsel, appointed by President Trump, was granted a 60-day stay in the case — expiring Monday — to pursue settlement talks.

The general counsel, Peter B. Robb, argued that two labor board decisions in December, one of which changed the legal standard for determining joint employment, might have weakened aspects of the case against McDonald’s and made a settlement more likely.

In his request for a stay, Mr. Robb said a settlement could “facilitate far more prompt and immediate remedial relief for the employees impacted by the alleged unfair labor practices.”

Before the December decision by the board, a parent company like McDonald’s could be considered a joint employer under federal labor law if it exerted indirect control over workers at a franchisee, or if it had the right to exercise control over workers that it nonetheless did not exercise.

After the board’s decision in December, an employer had to have direct and immediate control over workers to be considered a joint employer.

At the time he sought a stay, labor groups argued that Mr. Robb’s logic was specious because the board’s case against McDonald’s did not hinge on which definition of joint employment applied.

Lawyers for the Service Employees International Union and affiliated groups, which helped make the case against McDonald’s and have advocated for the workers, argued that even if the general counsel preferred to seek a settlement, it made no sense to stop the trial, which was only days from concluding, in order to do so.

In a court filing, they argued that stopping the trial would give McDonald’s an advantage by preventing union lawyers from cross-examining a key witness, and that it fostered “a game of hide-the-ball.”

Then, last month, one of Mr. Robb’s primary arguments for a pause in the trial abruptly deserted him when the labor board, on a procedural question, reversed its December decision narrowing the definition of a joint employer. At that point, the joint employer definition reverted to what it had been earlier in the trial.

Several Democratic senators, including Elizabeth Warren of Massachusetts and Cory Booker of New Jersey, stated in a March 7 letter to Mr. Robb that the board’s reversal “eliminates whatever support may have existed for your efforts to settle the McDonald’s case so near to the trial’s close,” and urged Mr. Robb to “swiftly resume and finish the trial.”

But Mr. Robb’s office pressed ahead with its efforts to reach a settlement before the stay expired. Last week, lawyers from the labor board’s regional offices abruptly reached out to several former McDonald’s workers involved in the case. In one instance, according to an email to a labor board lawyer from Micah Wissinger, a lawyer advocating the workers’ cause on behalf of the union, a labor board lawyer called a worker and asked if she “was ok with $50k” for back pay as part of the settlement. The offer was conditional on her waiving her right to be reinstated in her old job.

Mr. Wissinger said that the calls created the impression that workers needed to accept the offers before they consulted with him or his colleagues or anyone else, and that at least two did.

“It was a done deal by the time we found out,” Mr. Wissinger said. “They were completely cutting us out of the process.”

Bloomberg reported on the aggressive settlement efforts over the weekend.

Jennifer Abruzzo, who served as deputy general counsel of the labor board until 2017, said settlement discussions that exclude lawyers who back the workers were a break with custom.

“That’s unusual,” Ms. Abruzzo said. “The charging party is the one that the regions typically go to. And the charging party in this instance is the S.E.I.U.”

Content originally published on https://www.nytimes.com/2018/03/19/business/economy/mcdonalds-labor.html by NOAM SCHEIBER