By Hannah Rudder, NCL Intern
We were preparing a blog on the issue of McDonald’s workers forming a class to sue McDonald’s when we came across the fact that the fast food chain reported an increase in net income from the first quarter of 2015 to the first quarter of 2016 and attributed this increase to the minimum wage raise. McDonald’s CEO Steve Easterbrook cites lower employee turnover and higher customer satisfaction as a result of the higher wages. While raising the minimum wage has not helped every company increase profits, and organizations like the Chamber of Commerce argue it will lead to higher unemployment and a decrease in profits, McDonald’s shows that it has not hurt the company’s bottom line. Based on the experience of McDonald’s, it appears that paying a living wage is good for the company, the economy, and the worker-and other large chains should follow suit.In relation to McDonald’s wage news, three weeks ago, a District Court in California certified a class of past and present McDonald’s employees to bring certain wage-related claims against the fast food giant. This is the first time a judge has ruled that McDonald’s employees can band together and bring claims against the corporation, rather than just the individual franchisee. We loudly applaud the ruling. Historically, McDonald’s workers have never been granted the right to unionize, and this recent court decision gives workers the ability to petition one controlling body as a group.
Similarly, this decision parts with McDonald’s long-held stance that it is not responsible for franchise workers because it is not a joint employer; McDonald’s argues the franchisee is the sole employer. McDonald’s asserts that it is not fair to hold the franchiser accountable for franchisee’s employment practices. The court did not hold that McDonald’s was a joint employer, but instead agreed with the employees’ ostensible agency theory that posits that the employees are agents of McDonald’s.
The class of current and former employees initially brought 13 causes of action against McDonald’s and its franchisee. These claims included a large negligence claim, failure to pay overtime, failure to pay minimum wage, failure to give appropriate meal or rest breaks, and failure to reimburse employees for time required to maintain uniforms. The court ruled, however, that this class can only bring the claims of unpaid overtime, maintenance of uniforms, and miscalculated wages against McDonald’s; the other claims, including the negligence claim, were dismissed.
The group of employees settled with the franchisee for $700,000. This settlement means that if the class of employees proves McDonald’s violated the California labor laws, then McDonald’s will be liable for all of the damages under those claims.
The implications of this District Court decision certifying former and current employees as a class has far reaching implications, not only for McDonald’s, but for the whole fast food industry. This decision opens the door for fast food employees to introduce labor lawsuits against chains like McDonald’s, rather than just against a single franchisee. As the New York Times reported: “The district judge in California has now given lawyers for the McDonald’s employees the chance to prove in court what should be evident: that McDonald’s is responsible for ensuring that pay is fair and adequate and, as such, must be accountable when workers in its restaurants are stiffed.” If McDonald’s is found responsible for the wage violations, the fast food company will have to change its ways, and be far more aggressive in ensuring that its franchisees are paying workers fairly and adequately, and that the company is abiding by the laws related to all employee wages, hours, and benefits.