Brazil: McDonald's Fined $30 Million for Labor Law Violations

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By Ed Taylor

Dec. 6—The Brazilian unit of McDonald's has been hit with a $30 million fine for violating the country's labor laws.

The prosecutors office of the labor ministry announced the fine on Dec. 1 and stated that a hearing will be held on Dec. 13 where the payment of the fine will be discussed and McDonald's will “be informed of all penalties for the recurrence of its violations.”

McDonald's difficulties began in 2012 when it faced a civil suit charging it with ignoring Brazilian labor laws and establishing illegal working conditions for its employees. In 2013, the operator of McDonald's franchise in Brazil, a company called Arcos Dorados (“golden arches” in Portuguese), reached an agreement to settle the suit.

Under that agreement, McDonald's promised to set fixed working schedules for its employees and abandon the rotating hours system it was using, which is illegal in Brazil. The company also agreed to drop other illegal practices: the absence of work breaks for employees, demands for overtime in excess of two hours daily and the lack of a paid 24-hour break once a week.

Five-Month Investigation

Since then, however, labor unions have continued to complain that the company was violating labor laws. In response, the prosecutors office set up a six-member task force that spent five months in 2015 poring over more than 200,000 documents relating to 42,000 employees working in 515 McDonald's outlets. The investigation uncovered evidence that McDonald's was not complying with its 2013 agreement and continuing to violate labor laws.

According to the labor ministry's investigation, McDonald's employees were obliged to sign work contracts that did not spell out their total hours or when they were to begin and end work, could not leave the workplace during normal breaks and were required to eat their meals there and were forced to work up to seven hours consecutively without rest, all in violation of Brazilian law.

“The posture of Arcos Dorados continues the same,” said Moacyr Auersvald, president of the Confederation of Hospitality and Tourism Workers, the union group that is defending McDonald's workers. “They have not only defied labor laws for decades but the very authority of the legal agreement they signed. They are betting on the difficulty in inspecting the activities at their stores.”

McDonald's issued a statement in which it claimed that the Dec. 13 hearing is part of the “regular process of the accord signed by Arcos Dorados” in 2012.

To contact the reporter on this story: Ed Taylor in Rio de Janeiro at correspondents@bna.com

To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com

For More Information

For more information on Brazilian HR law and regulation, see the Brazil primer.

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