MCD McDonalds Corp

By Heather Haddon 

The National Labor Relations Board instructed a federal judge to approve a settlement in a case pertaining to McDonald's Corp.'s status as a joint employer, helping shield the company from liability from the employment practices of its hundreds of U.S. franchisees.

The decision is a victory for the world's largest fast-food chain as it faces calls to improve working conditions at its 14,000 domestic restaurants. If finalized, the determination would put more responsibility on franchisees for McDonald's and other companies to address the concerns of their workers.

In a 3-1 ruling, a panel of the labor body on Thursday accepted a settlement to resolve dozens of cases brought against McDonald's starting in 2012 over employment violations. The proposed settlement would give affected employees back pay from franchisees. McDonald's agreed to establish a settlement fund if restaurant owners declined to pay restitution themselves, an amount the panel set at $250,000.

Workers in the nearly 300 cases said they were punished after campaigning for a $15 hourly wage and union representation at McDonald's restaurants. The complaints alleged that some of the workers lost shifts or were fired.

The board found that the settlement was reasonable and instructed an administrative law judge, Lauren Esposito, to accept it.

The decision comes as the labor board and U.S. Department of Labor work to update the definition of joint-employer rules. The changes are expected to create a more stringent test of whether businesses from gyms to hotels have direct oversight over employees at franchises in disputes over matters such as federal wage requirements.

Business associations have criticized Obama-era joint-employer determinations for placing undue responsibility on businesses for decisions made by operators that license their brands.

They say that has stifled investments by businesses like McDonald's that franchise their restaurants and stores. Litigation brought against franchise businesses have increased by 93% since 2015, according to the International Franchise Association.

"This decision can bring much-needed clarity to franchise businesses of all sizes," a spokesman for the association said.

McDonald's is facing more pressure from workers to improve conditions at its restaurants.

A group of workers at McDonald's restaurants around Chicago sued the company last month, claiming that changes to store design such as opening counters and kitchen areas made them more vulnerable to assault.

Earlier in the November, workers represented by the American Civil Liberties Union and Time's Up Legal Defense Fund filed suits claiming that McDonald's hadn't properly handled allegations of sexual harassment at one Michigan restaurant.

Write to Heather Haddon at heather.haddon@wsj.com

(END) Dow Jones Newswires

December 12, 2019 16:01 ET (21:01 GMT)

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