Multiple labor lawsuits hit McDonald's

A sign directs customers to the drive-thru at a McDonald's restaurant on October 24, 2013 in Des Plaines, Illinois.

McDonald’s faces lawsuits in three states this week from workers who allege the fast-food giant violated labor laws by failing to pay overtime, making them work off the clock, failing to give them breaks, and making them pay for uniforms or uniform cleaning. The suits, seeking class-action status, were filed in New York, Michigan, and California, and could ultimately represent 30,000 or more workers, the plaintiff lawyers said in a press conference. The event was organized by labor-union-backed advocates, who are also pushing for a $15 per-hour wage industry-wide.

A novel aspect of the lawsuits is that they try to tie McDonald’s—and its valuable brand—to alleged wage and hour violations at franchise restaurants that the company neither owns nor directly operates. Lawyer Michael Rubin at Altshuler Berzon in San Francisco is representing a group of McDonald’s workers in California, and has pursued similar class-action cases against Walmart on behalf of temporary workers at its contracted warehouses near Los Angeles.

“The McDonald’s corporate entity was sued as well,” Rubin said, “as a joint employer, and as a principal agent, co-conspirator, negligent franchisor.”

Evidence that will be presented in the case includes software McDonald’s provides to franchises to reduce labor costs.

The company issued a statement saying: “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. We are currently reviewing the allegations in the lawsuits.”

In a recent 10k filing with the U.S. Securities and Exchange Commission, McDonald’s cited the risk to its business and forward guidance posed by “the impact of campaigns by labor organizations and activists, including through the use of social media and other mobile communications and applications, to promote adverse perceptions of the quick-service category of the IEO (informal eating out) segment or our brand..." The filing also cited upward pressure on wages in many markets around the world, "which may intensify with increasing public focus on matters of income inequality.”

Mary Chapman at food-industry research firm Technomic, which has done work for McDonald’s in the past, said she hasn’t yet seen any impact on fast-food companies’ profitability from activist campaigns. But she said the issue is on the industry’s radar.

“Consumers want to do business with people who feel the way that they do about issues, including social issues,” she said. “For some consumers, employment practices are very important. But for many more consumers, it’s more about price, convenience, and quality.”

Chapman pointed out that the employment narrative has changed over decades—not in the industry’s favor.

“In the past, the fast food employment story was a good one,” said Chapman. “The industry hired young people, and provided so many of today’s leaders with their first job.” But that story has shifted, with more middle-aged workers trying to earn a family wage from fast-food and other low-skilled service work.

Mark Brandau of Nation’s Restaurant News, who covers McDonald’s, said he has never before seen so much attention paid to the labor issues around fast-food. He said companies have to focus on it now. “I’m sure that they would like to see these issues being settled in the political arena,” said Brandau, “not in their dining rooms.”

About the author

Mitchell Hartman is the senior reporter for Marketplace’s Entrepreneurship Desk and also covers employment.

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