Labor Regulators Target McDonald's

Labor Regulators Target McDonald's
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Imagine the government brings charges against you but won't tell you what you're accused of. The judge insists you should know and proceeds with the case.

No, this is not the notorious English Star Chamber courts or even the FISA secret court. It's a proceeding conducted by the government's top labor regulator, the National Labor Relations Board. The NLRB's current target is McDonald's, which will be hauled before an NLRB administrative-law judge today.

The NLRB is supposed to operate as a neutral arbiter that represents the public interest in labor disputes, but in recent years it has essentially become the legal arm of organized labor — to the detriment of businesses and workers all across America. This case illustrates why Congress and the next president should abolish the NLRB entirely, or at least take away its adjudicatory powers. No federal agency should be used by special interests as a weapon against their opponents. ‚Äč

How did we get here?

In December 2014, the NLRB general counsel (essentially the prosecutor who brings cases before the NLRB and its administrative-law judges) consolidated numerous unfair labor practice charges brought by the Service Employee International Union and Fast Food Workers Committee against McDonald's franchisees — independently owned McDonald's restaurants. The cases named McDonald's USA LLC as a "joint employer" of all the people working for these restaurants.

Thus, the franchisor and franchisee would be held jointly responsible for any alleged labor-law violations by franchises across the country. The general counsel didn't provide any evidence or explain any legal theories behind the unprecedented allegation that McDonald's USA is a joint employer of its franchisees' workers.

When the charges were filed, the law was well-established that two businesses were considered liable as joint employers only when they both exhibited direct control over workers in hiring, firing, pay, and discipline. Then, in August 2015, through its ruling in a case called Browning-Ferris, the NLRB started expanding joint employer liability so that an employer may be held liable for violations when it exercises indirect or potential control over workers. But the general counsel has not explained exactly why McDonald's falls under this expanded definition, either.

The NLRB has sided with its own general counsel, saying he does not have to provide a bill of particulars to McDonald's USA. This would have required the general counsel to explain his rationale for naming McDonald's a joint employer and give the company the knowledge it needed to adequately defend itself at trial.

The general counsel was more forthcoming at an American Bar Association forum, where he said the "sole" reason the agency aggressively is pursuing the case is that "there is a national campaign that's called the 'Fight for $15' that is being run by a fast-food workers alliance that is seeking to raise wages in the fast food industry to $15 an hour."

Meanwhile, the NLRB went on a fishing expedition. It demanded hundreds of thousands of documents about McDonald's business operations. And while McDonald's was required to turn over a massive amount of information to the NLRB, the public must file a Freedom of Information Act request just to see the initial charges brought against McDonald's franchisees — and even then some the information is redacted.

Regardless of how things go for the fast food giant today, the reach of this case will extend far beyond one company. The potential precedent is ominous — a federal agency with unbounded power to litigate ill-defined charges against American businesses. That's something we should all fight.

Trey Kovacs is a policy analyst specializing in labor policy for the Competitive Enterprise Institute.

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