A group of black and Latino former McDonald's employees is following the lead of the National Labor Relations board and suing McDonald's, asserting in a complaint that the corporation should be held responsible for alleged racial and sexual harassment the employees experienced at a restaurant operated by a franchisee.
The lawsuit, filed this morning, claims that since McDonald's implements standards and controls for how its franchises operate, it is also responsible when those franchisees allegedly abuse their employees. This assertion of the company as a "joint employer" of staff at its franchises was previously made by the NLRB, a federal government agency, in a December court filing related to a separate lawsuit, in a move described as "the nightmare before Christmas" by Robert Cresanti, an executive vice president of the International Franchise Association.
If the courts agree McDonald's is a joint employer of restaurant staff at its franchises, there could be huge implications for corporations using the franchise model, which is particularly popular in the fast-food industry.
The 10 employees worked in McDonald's restaurants in Virginia, owned by Soweva, a restaurant franchiser. The suit alleges that when Soweva took over the restaurants, it "implemented a plan to reduce the number of African-American employees and hire more white employees," and that supervisors said they would have a hiring fair "to get the ghetto out of the store."
The hiring fair was held in March 2014 and nine of the employees who are now suing were fired in May and were told they "didn't fit the profile" of the franchises. One manager, the suit alleges, "touched female employees on their legs and buttocks," sent female employees "pictures of his genitalia," and once told employees, "My dick may not be big, but I make up for it with my tongue."
Of the 10 former employees suing, the highest wage was earned by Christina Chadwick, a 53-year-old Latina woman who had been working in McDonald's restaurants for 25 years. Before being terminated, she was making $10.20 an hour.
The suit is being filed in federal court in Virginia. A representative of Soweva could not be reached for comment.
"We have not seen the lawsuit, and cannot comment on its allegations, but will review the matter carefully," McDonald's said in statement. "McDonald's has a long-standing history of embracing the diversity of employees, independent Franchisees, customers and suppliers, and discrimination is completely inconsistent with our values. McDonald's and our independent owner-operators share a commitment to the well-being and fair treatment of all people who work in McDonald's restaurants."
From the lawsuit, here are some of the details of the alleged harassment, including calling unequal treatment and calling a Latino employee a "dirty Mexican."
The suit comes at a time when McDonald's franchise model is under legal pressure. About 90% of McDonald's 14,000 and owned and operated by independent franchisees, although the corporate company exercises significant control over how the franchises operate.
The National Labor Relations Board filed a complaint in December of last year saying that the central corporation was a "joint employer" and thus at least partially responsible for how workers were treated. The NLRB complaint alleged that McDonald's had "taken action" against employees "engaging in activities aimed at improving their wages and working conditions." The suit is also supported by the NAACP.
One of the suit's claims rests on McDonald's corporate control over their franchisees: "Several of the plaintiffs called McDonald's Corporate to complain about their terminations and the blatant racial discrimination. McDonald's Corporate, however, did nothing," the suit says.
It also says that McDonald's has "detailed instructions for franchisees in areas
including operations procedures, bookkeeping and accounting procedures, business practices and policies, personnel management, and any other area McDonald's Corporate wishes to control" for its restaurants. The suit says that McDonald's sent "mystery shoppers" — corporate representatives posing as customers — to inspect franchises' compliance with corporate standards every month, including the restaurants operated by Soweva.
McDonald's can also terminate franchise agreements if the restaurants are not operated "in a good, clean, wholesome manner and in compliance with the standards prescribed" by the company.
The suit says that some of these standards are set out in one manual, the "Operations and Training Manual," which franchisees, the suit says, call "the Bible." The manual proscribes a "zero tolerance" policy for harassment and discrimination, and "all McDonald's restaurants must provide employees with a respectful workplace."
The suit did not name a dollar figure, but did say that the 10 employees' termination inflicted "loss of wages and benefits, emotional distress, humiliation, loss of reputation, and other damages." The plaintiffs are suing lost wages and additional punitive damages.