Lawyers rep­re­sent­ing the com­pa­ny, its fran­chisees, the Ser­vice Employ­ees Inter­na­tion­al Union (SEIU) and the gov­ern­ment met to dis­cuss the future of a case that could lay the ground­work for union rep­re­sen­ta­tion and col­lec­tive bar­gain­ing at the country’s largest fast food brand.

McDonald’s ​“entire busi­ness mod­el is put at risk” by the lit­i­ga­tion, Jones Day’s Willis Gold­smith told Admin­is­tra­tive Law Judge Lau­ren Espos­i­to dur­ing the three-hour hear­ing. If Espos­i­to finds that the company’s over­sight and work­force man­age­ment poli­cies make it a ​“joint employ­er,” as the charg­ing par­ties con­tend, it could be held respon­si­ble for the work­ing con­di­tions in its fran­chised stores. Nation-wide, 90 per­cent of McDonald’s stores are owned by fran­chis­es.

Dur­ing the hear­ing Espos­i­to required McDonald’s to deliv­er over 700 doc­u­ments relat­ing to the struc­ture of the cor­po­ra­tion to the gov­ern­ment and the union.

“The evi­dence will show that McDonald’s direct­ed or helped direct how to deal with employ­ees at the fran­chised facil­i­ties in response to pro­tect­ed activ­i­ties,” said Jamie Ruck­er, Gen­er­al Coun­sel for the NLRB.

If the judge found coor­di­na­tion that estab­lished joint-employ­er sta­tus, the Board would be able to hold McDonald’s liable for ille­gal­ly retal­i­at­ing against work­ers who engaged in activ­i­ty pro­tect­ed by the Nation­al Labor Rela­tions Act in the Fight for 15 protests and orga­niz­ing cam­paign, and even­tu­al­ly to be named as a par­ty in col­lec­tive bar­gain­ing for those stores.

But before that can hap­pen, the board must prove that both McDonald’s and the own­ers of its fran­chised stores ​“share or code­ter­mine those mat­ters gov­ern­ing the essen­tial terms and con­di­tions of employ­ment” or ​“mean­ing­ful­ly affect” employ­ment issues such as hir­ing, fir­ing, dis­ci­pline, super­vi­sion and direc­tion of work. The Board believes it can prove joint employ­er sta­tus with infor­ma­tion from the shift sched­ul­ing soft­ware the com­pa­ny pro­vides to its stores, as well as com­mu­ni­ca­tions between com­pa­ny and indi­vid­ual loca­tions. Evi­dence and tes­ti­mo­ni­als are to be pre­sent­ed begin­ning May 26.

“McDonald’s is a com­pli­cat­ed company”

While forc­ing McDonald’s to pro­duce infor­ma­tion about the man­age­ment of its fran­chised stores, Judge Espos­i­to did revoke sub­poe­nas for infor­ma­tion about a cor­po­rate-owned restau­rant in Illi­nois. The Board and SEIU had sought the infor­ma­tion to com­pare with man­age­ment prac­tices at fran­chised stores, where the com­pa­ny says cor­po­rate direc­tives are con­sid­ered ​“option­al.” If man­age­ment at both the fran­chised and non-fran­chised stores were suf­fi­cient­ly sim­i­lar, Ruck­er argued, the ​“option­al” sug­ges­tions from McDonald’s could be shown to estab­lish joint-employ­er status.

Asked about the exact rela­tion­ship between McDon­alds Illi­nois, the sub­poe­naed store, and McDon­alds USA, the nation­al com­pa­ny, Gold­smith explained that ​“McDonald’s is a com­pli­cat­ed company.”

The Board and the unions also request­ed details about McDonald’s USA’s cor­po­rate struc­ture. But Jonathan Linas, also of Jones Day, explained that find­ing that infor­ma­tion would not be so easy. ​“There’s no one orga­ni­za­tion­al chart,” Linas said.

“The entire orga­ni­za­tion­al struc­ture of McDonald’s USA will not be pro­duced,” he said. ​“I don’t know [if] it exists. We’ve been look­ing a long time and we don’t have one.”

Cred­i­ble Allegation

The stakes of the pro­ceed­ings are high and McDonald’s has hired the law firm Jones Day, which over­saw the bank­rupt­cy and restruc­tur­ing Gen­er­al Motors and the City of Detroit, to lead its defense.

McDonald’s busi­ness mod­el in part rests on its exemp­tions from lia­bil­i­ty for the work­ing con­di­tions at its fran­chised stores. But even if these exemp­tions were to change, it is unclear what the impli­ca­tions for the rest of the fast food indus­try would be.

First, a find­ing of joint-employ­er sta­tus would have to sur­vive in fed­er­al court, an insti­tu­tion noto­ri­ous­ly unfriend­ly to work­ers’ col­lec­tive action. And then it would only apply to the spe­cif­ic loca­tions and con­di­tions named in the complaint.

“As soon as there is some kind of a deter­mi­na­tion that an employ­er is a joint employ­er, the com­pa­ny just restruc­tures the rela­tion­ship,” says Michael Duff, a law pro­fes­sor at the Uni­ver­si­ty of Wyoming who worked at the NLRB for nine years. ​“And then you get anoth­er round of litigation.”

Because the joint-employ­er sta­tus would only apply to fran­chis­es named in the con­sol­i­dat­ed case, Duff explained, orga­niz­ing cam­paigns through the NLRB could only occur at those stores. How­ev­er, he added, an expand­ed joint employ­ment stan­dard could facil­i­tate orga­niz­ing at oth­er sim­i­lar fran­chis­es in the future.

​“Once you have a broad­er way of think­ing about the employ­ment rela­tion­ship, it opens up more kinds of work­places to the cred­i­ble alle­ga­tion that this is a joint-employ­er rela­tion­ship,” said Duff.

The charg­ing par­ties are skep­ti­cal that McDonald’s work­force man­age­ment sys­tems can be restruc­tured. Cit­ing an April 2014 state­ment by then-CEO Dan Thomp­son, they allege the com­pa­ny has respond­ed to falling prof­its with a ​“reset” plan that requires the com­pa­ny to take greater con­trol of staffing and sched­ul­ing to max­i­mize in-store revenues.

Guard­ed Campaigns

In its defense, the McDonald’s is argu­ing that any coor­di­nat­ed response at its fran­chised stores against pro­tect­ed activ­i­ty was law­ful-employ­er free speech, pro­tect­ed under the NLRA.

Under the 1947 Taft-Hart­ley amend­ments to the Act, Gold­smith explained, McDonald’s has ​“the absolute unfet­tered right to engage in non-coer­cive free speech in response to attacks on the brand.” Coor­di­na­tion on these grounds, he argued, does not con­sti­tute joint-employ­er status.

To estab­lish its case, McDonald’s sub­poe­naed infor­ma­tion on the inter­nal work­ings of SEIU’s cam­paign, includ­ing inter­nal doc­u­ments from the union, the pub­lic rela­tions firm Berlin Rosen and two inves­tiga­tive firms.

“We are enti­tled to find out who they talked to and what they spoke about,” Gold­smith said, refer­ring to one of the inves­tiga­tive firms hired by the SEIU which may have spo­ken to work­ers. The union coun­tered that reveal­ing the insides of its cam­paign would have a ​“chill­ing effect” on orga­niz­ing, as the fast food cor­po­ra­tion could threat­en those revealed with retal­i­a­tion. On Thurs­day, April 10, Espos­i­to revoked the sub­poe­nas against SEIU and the third parties.

Open-end­ed future

The pace of the pro­ceed­ings since work­ers began protest­ing in 2012 also gives some sense of the scope of the cam­paign dri­ve being led by SEIU.

Since Novem­ber 2012, at least 310 charges of ille­gal retal­i­a­tion against work­ers engag­ing in pro­tect­ed activ­i­ty have been filed by work­ers and their rep­re­sen­ta­tives. Over 100 of these charges have been found to have mer­it, and as of Feb­ru­ary 13, the Board had filed 19 com­plaints across 14 admin­is­tra­tive regions across the coun­try — offices in Los Ange­les, San Fran­cis­co, Phoenix, Min­neapo­lis, Kansas City, St. Louis, New Orleans, Chica­go, Detroit, Indi­anapo­lis, Pitts­burgh, Atlanta, Philadel­phia and Man­hat­tan. As the protests have con­tin­ued, so have the unfair labor prac­tice charges filed by the union.

If McDonald’s is found to have coor­di­nat­ed a nation­al response to protest­ing work­ers, as the Board is argu­ing, that could prove that the com­pa­ny exer­cis­es more con­trol over the work­ers in its stores than it claims.

Such a find­ing would be ini­tial­ly lim­it­ed and estab­lish a legal basis for col­lec­tive bar­gain­ing at just a hand­ful of stores. How­ev­er, the find­ing could facil­i­tate tra­di­tion­al NLRB orga­niz­ing across the heav­i­ly fran­chised ser­vice sec­tor, forc­ing the com­pa­ny to bar­gain with work­ers who opt for union representation.

SEIU has made a con­sid­er­able invest­ment (“over $18 mil­lion at least,” said Gold­smith) in an open-end­ed cam­paign with lit­tle promise of imme­di­ate returns. The cur­rent case in front of the NLRB shows that the union is far from guar­an­teed from obtain­ing new dues-pay­ing mem­bers any time soon, mak­ing the union’s invest­ment an incred­i­bly risky gam­ble — some­thing most unions would be loathe to even consider.

The cam­paign has sparked a nation-wide move­ment that has already won min­i­mum wage increas­es and raised entry-lev­el pay for work­ers across the retail and fast food indus­tries. Whether that momen­tum will trans­late into joint-employ­er sta­tus or fast food work­er union mem­ber­ship may depend on the rul­ing hand­ed down in Judge Esposito’s courtroom.