By Annie Gasparro And Melanie Trottman
Ten former restaurant workers sued McDonald's Corp. along with
one of its franchisees for alleged wrongful termination, in a move
that tests the legal implications of a recent decision by the
National Labor Relations Board's general counsel to hold the
fast-food giant accountable for franchisees' actions.
The complaint, filed on Thursday in the U.S. District Court for
the Western District of Virginia, alleges that the 10 minority
employees who worked at two McDonald's locations in Virginia run by
the franchisee, Michael Simon, were fired because of their race, or
quit because of racial harassment.
The former workers claim that Mr. Simon, who took over the
stores in 2013, wanted to reduce the number of African-American
employees and hire more white employees. They say supervisors told
workers they were conducting a hiring fair because they "need to
get the ghetto out of the store," and that it was "too dark" in the
restaurant.
Mr. Simon couldn't immediately be reached for comment Thursday.
Calls to his restaurants were directed to McDonald's, which
declined to provide contact information for him. Local media in
Virginia reported in May, when the allegations initially surfaced,
that he denied firing employees based on race and said in a
statement that "I continually strive to maintain an environment in
which everyone feels valued and accepted."
McDonald's said it hadn't seen the lawsuit, but would review the
matter carefully. "McDonald's has a long-standing history of
embracing the diversity of employees," the company said.
"McDonald's and our independent owner-operators share a commitment
to the well-being and fair treatment of all people who work in
McDonald's restaurants."
The lawsuit will test the civil-court ramifications of recent
NLRB moves that could fundamentally reshape the relationship
between big retailers and their franchisees. The NLRB's general
counsel in July determined McDonald's could be treated as a joint
employer with its franchisees in a series of worker complaints over
employment conditions.
The NLRB then last month issued complaints naming McDonald's
along with its franchisees for allegedly violating rights of
restaurant workers who participated in activities to improve wages
and working conditions.
Marshall Babson, an attorney at Seyfarth Shaw LLP who represents
employers in labor cases, said that when the general counsel's
reasoning challenges conventional understanding as the July
decision did, it often gives way to related civil lawsuits. "It
could spark all these lawsuits...but the court isn't bound by the
NLRB's findings," said Mr. Babson, a former NLRB member.
McDonald's and some business groups argue that holding the
franchiser accountable for franchisees' actions is unfair because
franchisees set wages and control working conditions in their
restaurants.
In issuing its complaints last month, the NLRB general counsel's
office said that its investigation found that McDonald's, through
its franchise relationship and its use of tools, resources and
technology, "engages in sufficient control over its franchisees'
operations, beyond protection of the brand, to make it a putative
joint employer."
Trade groups such as the International Franchise Association say
treating franchisers as joint employers undermines a longtime
business model they say gives store owners autonomy and helps the
economy thrive. They also say it makes franchisees more vulnerable
to campaigns by union-backed groups, like Fast Food Forward, a
group backed by the Service Employees International Union that has
helped organize protests at McDonald's and other chains for
demanding a $15 hourly minimum wage and the right to form a union
without employer backlash.
The National Association for the Advancement of Colored People
and Fight for 15--a campaign established by Fast Food Forward to
improve working conditions for retail workers--are providing
organization support to the 10 former employees who filed the suit.
Fight for 15 also is providing financial support, according to a
person close to the plaintiffs, and it launched a hotline in
response to the allegations for workers nationwide to report any
similar incidences, suggesting it's interested in pursuing further
litigation.
The former employees say they are requesting a jury trial after
the Equal Employment Opportunity Commission conducted an
investigation and gave them permission to file a lawsuit. They are
not going through the NLRB because it governs collective bargaining
issues, and the nature of this complaint is discrimination.
Write to Annie Gasparro at annie.gasparro@wsj.com and Melanie
Trottman at melanie.trottman@wsj.com
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