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A labor board judge July 18 rejected an agreement proposed by McDonald’s Corp. to settle a closely watched dispute over union rights and pay in a 42-page opinion that was an effective rebuke of the fast-food giant’s offer.
Administrative law Judge Lauren Esposito said the settlement offer lacks “certain fundamental elements” and suggested that McDonald’s “purposefully delayed” the case until the National Labor Relations Board was under more management-friendly, Republican control. NLRB top prosecutor Peter Robb’s (R) decision to move for a settlement in the dispute after 155 days of trial and just before the close of hearings is “incomprehensible,” Esposito wrote.
McDonald’s was proceeding normally with the board’s process, but apparently moved for settlement—as did Walmart Inc. in an unrelated case—after the Senate confirmed Robb. The company said the offer was fair and reasonable, and that it’s considering an appeal. Robb didn’t immediately respond to a request for comment.
“The board is what it is and you have to deal with the hand you’re dealt with respect to political realities, the nominations process, and how the board operates,” Matthew Haller, a senior vice president at the International Franchise Association, told Bloomberg Law July 18.
The case has significant implications for the company and other franchises. McDonald’s looked to be out of the woods after Robb reversed course from his Democratic predecessor, but Esposito’s unusual opinion points to a likely appeal and further litigation before the matter is settled.
The judge “found the settlement was not in the public interest, and that it failed to properly remedy McDonald’s role in retaliating against workers for seeking union representation,” Bobby Scott (D-Va.), ranking member of the House Workforce Committee, told Bloomberg Law July 18. “This raises an important question: Why did the NLRB’s general counsel agree to such an unreasonable settlement in the first place?”
A spokeswoman for Republicans on the committee declined to comment on the decision specifically.
The case, brought by a coalition of unions that includes the Service Employees International Union, alleges McDonald’s and its franchisees fired and otherwise retaliated against workers for participating in the national Fight for $15 movement.
The unions are trying to tag the McDonald’s Corp. as a joint employer of the workers at its franchisees’ locations, which would make the parent organization jointly liable for any legal violations. That determination depends on how much of the workers’ employment terms and conditions are actually controlled by McDonald’s, as opposed to individual franchise owners.
Haller said an appeal is likely. McDonald’s is a member of the IFA, which has generally backed its positions in the dispute and characterized the case as an existential threat to the franchise business model.
The five members of the bipartisan board—a majority of whom are Republican appointees with professional backgrounds representing business—would then decide whether Esposito’s decision stands.
“I think McDonald’s sees themselves in the driver’s seat, and the chances are that they’re right, at least insofar as the board is concerned,” former NLRB Chairman Bill Gould (D) told Bloomberg Law.
The NLRB under Obama made it easier to find joint employment, but the board has sought to reverse course under President Donald Trump’s appointees.
The company could also rework the settlement offer in coordination with Robb and the unions, or accept Esposito’s decision and resume and complete the trial, Micah Wissinger, an attorney representing the various affiliated unions in the case, told Bloomberg Law July 18.
A number of observers agreed that the judge’s order isn’t typical.
McDonald’s “purposefully delayed the presentation of its direct case in order to obtain a ‘stay’ of the hearing” while the board considered one of its motions in the case “or for some other undisclosed purpose,” Esposito said.
“It’s pretty clear the judge is frustrated with McDonald’s and its behavior,” Catherine Ruckelshaus, general counsel for worker advocacy group National Employment Law Project, told Bloomberg Law, adding that it’s unusual for such a decision to “list a litany” of procedural hurdles.
Esposito noted that McDonald’s insisted on a stenographer before moving forward with conference calls before the trial started; would unreasonably delay setting up meetings; and refused to present more than one or two witnesses on a given day despite there being time available to do so.
“At times, she noted that the general counsel and McDonald’s had different views of what the settlement consists of,” Gould said.
“I think that’s clearly sending a message to McDonald’s and to the general counsel that obviously she’s interested and willing to review any settlement, but it can’t be done like this,” Ruckelshaus said.
—With assistance from Josh Eidelson (Bloomberg)
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