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McDonald's $3.75M Settlement: Corporate Probably Not Loving It

By George Khoury, Esq. on November 02, 2016 | Last updated on March 21, 2019

In what is being hailed as a historic settlement for workers at franchised McDonald's restaurants, the fast food behemoth agreed to settle labor violation claims asserted by franchise employees. The settlement is being reported as a first of its kind against the burger maker, as it holds McDonald's, as the franchisor, responsible for the acts of its franchisees.

While McDonald's corporate adamantly asserts that they are not the employers of the franchisee's employees, there is a pending National Labor Relations Board (NLRB) action to decide this exact issue.

Who's Getting Paid for What?

The $3.75 million settlement, after deducting legal costs and fees, will be divided amongst 800 employees from five different McDonald's throughout California. While no fault is being admitted in the settlement, the money is meant to pay back employees who worked the overnight shift without being paid overtime, as well as to reimburse employees who were not reimbursed for the time and expense of maintaining their uniform, as well as other labor violations.

The attorneys and legal costs make up more than half the total amount, which still is awaiting approval from the court.

What the Settlement Means

The case already had an in-court determination that McDonald's corporate was not a joint employer; however, in making that determination, the judge left the door open for the plaintiffs to assert that corporate was their primary employer rather than the franchisee. The settlement allows McDonald's to not have to worry about the case setting bad precedent for them in the courts. McDonald's corporate asserts that the settlement was done for pragmatic reasons related to litigation costs.

What the NLRB Action Means

If McDonald's is found to be a joint employer by the NLRB, it could mean that McDonald's employees nationwide could unionize and negotiate with McDonald's corporate rather than individual franchisees when it comes to wages and benefits. Currently, there is a push among service employees and fast food workers to push the minimum wage up to $15, as many employees in this sector are unable to negotiate for better wages.

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