Administrative Law Judge Rejects Settlement Between NLRB and McDonald’s

By Kent Franchise Law Group

Last week, Administrative Law Judge Lauren Esposito rejected a settlement agreement between the NLRB and McDonald’s in its pivotal joint-employer case. This case originally began when the NLRB filed charges, asserting that McDonald’s was liable for several labor law violations committed by its franchisees through a joint-employer theory. In her decision, Judge Esposito reasoned that the settlement agreement lacked “a reasonable resolution based on the nature and scope of the violations alleged and the settlements’ limited remedial impact.” The settlement agreement allowed McDonald’s to maintain its position that it was not liable or responsible for the labor violations of its franchisees. McDonald’s released this statement in response to the decision:

“The NLRB General Counsel, McDonald’s USA, and various franchisees negotiated a settlement agreement that is fair, reasonable, and provides the opportunity now for full and complete relief to all current and former franchisee employees affected by the litigation.”

McDonald’s also stated that it will be exploring their options to appeal this decision or work with the NLRB general counsel to reach a new settlement agreement before Esposito makes her final decision on the case.

McDonald’s was hopeful that Judge Esposito would approve the settlement in order to avoid a broad precedential decision that would force franchisors all over the country to rethink the way they operate their franchises. If this case ends in a ruling against McDonald’s, it would expose franchisors to far more liability for the actions of franchisees with respect to employment issues.