I wrote about this McDonald’s lawsuit a couple of years ago. See my prior post here. The lawsuit represented a new approach to franchisees. For years, even decades, persons suing franchisees could not also sue the parent company. A person could sue the local McDonald’s, but not the parent company. The theory was that the parent corporation sells work systems, but does not otherwise exert control over the franchisee. That theory started to change in 2015 when the National Labor Relations Board found that a company that hired a management company could indeed be liable in those rare situations when the first company retained some minimal management control. The first company and the new company would be a joint employers, said the NLRB.
In 2016, some McDonald’s workers walked off the job to call for higher wages. They suffered retaliation and then filed complaints with the NLRB. As I mentioned in my 2016 post, a simple franchisee agreement does not normally provide enough indicia of control to justify a joint employer relationship. McDonald’s settled the investigation with the NLRB. See Reuter’s report here. McDonald’s agreed to pay $3.75 million to settle the back wage claims. See Fortune report. According to the Fortune report, a judge ruled in 2017 that McDonald’s could not be liable as a joint employer, but said the company could be found liable if the employees believed the parent company was their employer.
Jon Hyman, an employer side blogger, seems to believe the matter settled in terms favorable to the McDonald’s parent company. See his post here. Regardless, it is likely that the joint employer theory has legs and will not go away soon.