Home > Uncategorized > A huge win for contractors and franchise workers

A huge win for contractors and franchise workers

August 28, 2015

Today I’m celebrating some good news for working-class people in this country. Namely, the definition of “employee” is changing, making it easier for employees at McDonalds and other places to complain about poor treatment. The good news comes via a National Labor Relations Board ruling yesterday.

I wrote previously about the economics of McDonalds franchises, but it comes down to this: 90% of the low-level employees at McDonalds don’t technically work for McDonalds at all; instead, they work for a local franchise owner, who in turn rents stuff, including the McDonalds brand, from the parent corporation.

In spite of the technical and legal framework, the parent corporation controlled the burger flippers at a minute level, through surveillance, customer service policy, branding requirements, and most importantly through controlling the margins of the franchise owner.

The legal separation, which was solidly working until yesterday, meant that employees couldn’t complain about bad treatment of their employer, McDonalds, but rather had to complain only about the way the local franchise owner treated them. This prevented large-scale unionization attempts among other things. The new ruling means that the workers will have the right to negotiate with McDonalds corporation as a “joint employer.” Another way of saying this is that McDonalds will have much more liability when it concerns mistreatment of franchise workers.

An example of how this is good news is the following: it used to be true that if one McDonalds unionized, and demanded and received better wages, it would have little knock-on effects and indeed it would be quite difficult to pull off, given how tight the margins are for franchisees. Now, with the new ruling, a second McDonalds location could possibly use that one example as leverage in a bargaining agreement. Moreover, as a joint employer, McDonalds corp cannot shut down a franchise just for unionizing.

The ruling extends well beyond McDonalds. In fact the original case was a company that hired contractors to do its recycling. It will likely mean that it will in general be much harder for corporations to create legal distance between itself and the people hired to do work for that company, so contractors of all varieties, as long as the parent company has a substantial amount of control over the workers.

Categories: Uncategorized
  1. Leopold Dilg
    August 28, 2015 at 11:04 am

    Thanks, Mathbabe, for spreading the word about this critical development! Since the President appoints a majority of the members of the NLRB and of most of the other agencies that make the bulk of our country’s laws (EPA, FDA, SEC, FCC, etc.), this shows just another reason for taking the Presidential election VERY seriously. For example, Scott Walker’s running on the platform of erasing workers’ right to form unions, something he did with gusto in Wisconsin, explaining why the Koch brothers are showering him with mazuma. In all countries it’s a fundamental constitutional or legislative right for workers of a corporation to join together for collective bargaining and striking (just as suppliers of capital have the right to collectivize through pooling their shares in the joint-stock corporation and the right to “strike” by locking out their workforce — and indeed that’s subsidized by shareholders’ legal immunity from corporate liabilities that exceed share value.) So, we’d see an astounding regression to 19th Century laissez-faire if Walker wins the White House. What we need now is just the opposite — to strengthen workers’ bargaining power and reverse the startling, steady increase in the profit/executive profit share relative to the wage share since the 1970s.


  2. August 28, 2015 at 2:04 pm

    Thanks for your comment!!


  3. Trevor H
    September 2, 2015 at 5:39 pm

    This is a development which should be warmly welcomed by those such as myself with a libertarian bent. It’s far more preferable for wage and working conditions to be set by a union and management where both sides presumably have an informed and vested stake in the health and prosperity of the business rather than imposing arbitrary and inflexible rules from government. Hopefully this helps avoid new rules like a $15 national minimum wage which could maybe be absorbed by high cost areas like Seattle or New York but which I believe would be devastating to Mississippi, Puerto Rico or most any rural area. I’m not trying to provoke a debate about minimum wage, just trying to use that as an example of a situation where a balanced negotiation between employer and employee will deliver a better outcome for both sides than an externally imposed rule.


  1. August 29, 2015 at 5:46 am
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