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By Chris Opfer
May 5 — Around the same time McDonald's Corp. was deciding to raise wages for the lowest-paid workers at company-owned restaurants, it was also lobbying Congress on the potential negative impact that increasing the federal minimum wage could have on small- and medium-sized businesses, like those that run most of the fast food giant's franchise locations across the country.
Lobbying firm Brownstein Hyatt Farber Schreck worked on behalf of McDonald's during the first three months of the year to inform lawmakers about the company's decision to raise the minimum pay for workers at company-owned restaurants to at least $1 more than the local minimum wage, according to lobbying disclosure records and a company spokesperson.
The company also sought to “educate” members of Congress about the pitfalls of rolling out a wage increase too quickly and the need for any minimum wage legislation to address separate health-care and tax issues affecting businesses.
“We believe that any minimum wage increase should be implemented over time so that the impact on owners of small and medium-sized businesses—like the ones who own and operate the majority of our restaurants—is manageable,” Lisa McComb, the company's media relations director, told Bloomberg BNA via e-mail May 5.
“Additionally, we believe that any increase needs to be considered in a broad context, one that considers, for example, the impact of the Affordable Care Act and its definition of ‘full time' employment, as well as the treatment, from a tax perspective, of investments” made by business owners, she said.
The lobbying effort comes as McDonald's fights unfair labor practice charges based on the theory that it is a “joint employer,” along with franchisees, of workers at franchise restaurants.
Although the company has steadfastly maintained that it doesn't control franchise employees' pay and other working conditions—arguing that expanded joint employer liability would destroy the franchise business model as it currently exists—the lobbying activity is a sign that McDonald's is at least looking to soften the blow for its franchisees of any forced minimum wage increases.
McComb said McDonald's hasn't lobbied specifically against legislation introduced in the last Congress that would have raised the minimum wage to $10.10 from $7.25 or a recently introduced bill to hike the pay floor to $12 by 2020.
Instead, she said the company's position is that any federal minimum wage measure “should be considered as a part of a larger, comprehensive package which would include the ACA and tax provisions.”
The $10.10 bill would have raised the minimum wage in three steps over two and a half years. The Senate version of the legislation also would have extended a tax code provision allowing businesses to expense the costs of qualifying property in the year it is placed in service, rather than depreciating the costs over time. The $12 measure would increase the minimum wage in five annual steps, without a similar tax offset.
McDonald's paid Brownstein Hyatt $80,000 in the first quarter of this year to lobby on the minimum wage, joint-employer liability and other issues, according to a federal lobbying disclosure form. The firm also listed minimum wage among a number of issues for which McDonald's paid it $310,000 to lobby Congress in 2014.
McDonald's announced in April that it plans to boost the pay for workers at company-owned restaurants to more than $10 per hour on average by the end of next year and to begin offering paid vacation time. The move doesn't apply to workers at the more than 30,000 McDonald's franchises in the U.S., which make up about 90 percent of the company's restaurants.
On May 4, McDonald's unveiled a company turnaround plan to fight flagging profits, including by franchising more restaurants. As part of that plan, the company said it plans to sell more than 3,500 company-owned restaurants worldwide to franchisees.
Judy Conti, the National Employment Law Project's federal advocacy coordinator, cited what she called the “hypocrisy” of the company cutting nearly in half the number of restaurant workers it employs so soon after announcing that it would boost those employees' paychecks. She also said McDonald's effectively depresses wages for franchisee workers by controlling most of their franchisees' food, property, equipment and other business costs.
“It's part and parcel of the regular efforts by big business to deny workers a living wage,” Conti said of the company's stance on minimum wage legislation. “It's not the minimum wage increase that could be breaking the backs of these franchisees, it's all of the costs that McDonald's puts on the businesses.”
Some industry groups with which the company is affiliated have also expressed concerns about a federal wage hike. The National Restaurant Association, which counts McDonald's among its more than 150 members, opposes minimum wage legislation that doesn't include tax or other offsets for businesses.
Angelo Amador, the group's vice president of labor and workforce policy, told Bloomberg BNA May 4 that the organization didn't oppose the minimum wage hike measure signed into law by President George W. Bush in 2007 because it included a $4.8 billion small business tax package.
The International Franchise Association, which has lobbied strongly against expansion of joint employer liability and lists McDonald's as a partner in its Franchise Action Network, lobbied against the $10.10 minimum wage bill in 2014 and opposes the $12 measure.
“As we have seen over the past several months, many major companies that have raised their wage level are proof that market forces, the free enterprise system, not government mandates, are the best way to encourage increases in wages that may be necessary for employers to recruit, develop and maintain quality employees to remain competitive in the communities in which they operate,” IFA President Steve Caldeira said in a statement following the $12 measure's introduction last month.
Two major national retail companies that announced they were voluntarily raising low-wage workers pay earlier this year—Wal-Mart and Target—didn't disclose any lobbying activity on the federal minimum wage issue during the first quarter.
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