By Julie Jargon
McDonald's Corp. said Thursday that it would probe allegations
that the fast-food giant underpaid some U.S. staff and deducted
expenses that left them below state or federal minimum-wage
levels.
A long-running campaign over McDonald's labor practices
escalated this week as a group of employees filed seven lawsuits
against the company and some of its franchisees, seeking
unspecified back pay and damages.
The 27 named plaintiffs in suits filed in three states claim to
represent tens of thousands of McDonald's workers, and are seeking
class-action status for their actions. The allegations include
workers being forced to clock out during times when restaurants
were quiet and barred from taking breaks, while some overtime was
left unpaid and staff bore the cost of buying and cleaning
uniforms.
"We are currently reviewing the allegations in the lawsuits,"
said a McDonald's spokeswoman. "McDonald's and our independent
franchisees are committed to undertaking a comprehensive
investigation of the allegations and will take any necessary
actions as they apply to our respective organizations."
McDonald's has more than 14,000 restaurants in the U.S., 90% of
which are owned by franchisees, employing around 750,000 staff.
The suits name McDonald's in addition to the franchisees
because, the plaintiffs allege, the company sets the policies to be
followed at its restaurants.
A year-long campaign by fast-food workers backed by the Service
Employees International Union has seen protests against restaurant
owners and calls on chains to raise wages to $15 an hour and allow
staff to join a union.
McDonald's has come under particular fire from critics such as
Fast Food Forward and Low Pay Is Not OK after posting messages on
an internal employee resource hotline and website that included
suggestions that workers seek government assistance or take a
second job to make ends meet.
The lawsuits filed this week in either state or federal court in
California, Michigan and New York all seek class certification or
collective-action certification.
The pressure on McDonald's comes amid a debate in Washington
over whether to raise the federal minimum wage to $10.10 an hour
from $7.25. Numerous states and cities have recently raised the
minimum wage, putting increasing cost pressure on restaurants,
which are also facing rising labor costs associated with the
Affordable Care Act.
Attorneys representing the workers say some of the plaintiffs
were referred to them indirectly by the Service Employees
International Union. The attorneys declined to say who is paying
their retainers.
The McDonald's lawsuits come as the hamburger chain is trying to
improve customer service as a way to boost lagging sales.
McDonald's on Monday reported its fourth consecutive month of
same-store sales declines in the U.S.
The burger giant has admitted in recent months to losing
relevance with consumers and to having complicated its own kitchens
with too many new products that in turn slowed service. McDonald's
Chief Financial Officer Pete Bensen told investors on Tuesday that
the company is focusing on getting back to the basics of providing
fast, friendly service by ensuring restaurants staff properly to
serve more customers faster, especially during peak periods.
An attorney representing plaintiffs in Michigan said McDonald's
employs software at its restaurants that provide data on the
stores' labor cost as a percentage of sales. The attorney said that
when labor costs reach a certain percentage of sales, some
restaurant managers take workers off the clock to keep labor costs
down. Attorneys also said McDonald's software system provides
notice to franchisees when workers are nearing eligibility for
overtime.
So-called wage theft is a common practice in service industries,
according to Catherine Ruckelshaus, general counsel at the National
Employment Law Project, a nonprofit research and advocacy
organization. A 2010 study by the group estimated that the
practices reduce the annual income of the average low-wage worker
by 15%, or $2,600.
Write to Julie Jargon at julie.jargon@wsj.com
Corrections & Amplifications McDonald's and some franchisees
face 27 named plaintiffs in suits alleging wage theft. An earlier
version of this article incorrectly said there are 13
plaintiffs.
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