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Multiple class action suits against McDonald’s contend fast-food chain, franchisees violated federal, state wage laws

By Lisa Milam-Perez, J.D.

McDonald’s employees in three states filed class-action lawsuits last week against the fast-food chain and several of its franchise owners, contending the employers have been shaving work hours, denying meal and rest breaks, failing to pay overtime, compelling employees to work off the clock, and forcing them to pay for their own uniform cleaning — effectively dropping their hourly rate below the minimum wage. The lawsuits seek to hold McDonalds liable for wage violations by the franchisees as a joint employer, in addition to the claims against company-owned restaurants.

The complaints, which allege McDonald’s “is systemically stealing employee’s wages,” were filed in California, Michigan and New York. They contend the company violates state and federal minimum wage laws as well as other state labor laws.

Three lawsuits in California were filed against both McDonald’s and its franchise owners; a fourth suit asserts similar claims on behalf of a statewide class of workers in McDonald’s corporate-owned restaurants, adding claims for unpaid wages, penalties, and other relief to an already pending action. (One of the California complaints is found here.)

“We’ve uncovered several unlawful schemes, but they all share a common purpose — to drive labor costs down by stealing wages from McDonald’s workers,” said Michael Rubin of Altshuler Berzon, who filed the California suits. Rubin said more McDonald’s employees in California have since come forward with similar wage theft allegations.

A suit filed in New York alleges that McDonald’s forces workers to incur the time and cost of maintaining their own work uniforms, driving their wages below the legal minimum. “With $28 billion in revenue in 2013 alone, McDonald’s can certainly afford to provide its minimum-wage workers with this money to clean their uniforms, as required by law, instead of making them pay for the privilege of wearing McDonald’s advertising,” said Jim Reif, of Gladstein, Reif and Meginniss, who filed the New York suit.

In two Michigan suits against McDonald’s and Detroit-area franchisees, workers assert as well that they are regularly forced to show up for work but then required to wait without pay until enough customers show up. According to one complaint, the franchisees use McDonald’s-provided software to monitor the ratio of labor costs to revenues; when it exceeds a corporate-set target, workers are told, upon arriving for work, to wait for up to an hour to clock in. Managers will also direct workers who have already clocked in for their shifts to clock out for extended breaks until the target ratio is again achieved.

“Workers are not paid for the wait times, and McDonald’s Corporation knowingly tolerates this practice, in violation of federal labor law,” according to a press statement announcing the lawsuits.

“As these cases show, it’s a persistent problem in too many low-wage industries like fast food, which is why the U.S. Department of Labor has named restaurants and fast food as one of its priority industries for strategic enforcement,” said Catherine Ruckelshaus, general counsel at the National Employment Law Project. “These violations can run into the millions of dollars quite quickly, and as one of the largest low-wage employers in the country, McDonalds should be setting standards, not undermining them.”

McDonald’s response. “McDonald’s and our independent owner-operators share a concern and commitment to the well-being and fair treatment of all people who work in McDonald’s restaurants,” said Heidi Barker Sa Shekhem, McDonald’s Global External Communication, in response to the lawsuits, noting the company was currently reviewing the allegations. “McDonald’s and our independent owner-operators are each committed to undertaking a comprehensive investigation of the allegations and will take any necessary actions as they apply to our respective organizations.

Democrats seek information. In related news, earlier this month George Miller (D-Calif), the leading Democrat on the House Education and the Workforce Committee, requested detailed information from five of the nation’s largest fast-food companies about their business model and labor practices, particularly with respect to their franchisees. Citing numerous reports of wage theft and the large percentage of fast food employees who turn to public assistance, Miller, along with Joe Courtney (D-Conn), ranking member on the Subcommittee on Workforce Protections, sent letters to the CEOs of McDonald’s, Yum! Brands, Burger King, Papa John’s, and Wendy’s, in an effort to gain insight into the companies’ “labor policies and practices vis-à-vis” their “franchise relationships nationwide.”

Miller asked the companies to turn over copies of their standard franchise agreements; training materials, policies, and guidance to managers of both corporate-owned restaurants and franchise owners about wages, hours, labor standards, and compliance with relevant labor laws; an explanation of how the companies oversee their franchisees with respect to labor and wage practices, including an explanation of how they address noncompliance and their efforts to deter such violations; information on how the company tracks — and responds to — wage-hour violations by franchisees; and information about alleged violations of local, state or federal wage laws by franchisees and corporate restaurants since 2009.

“Fast food workers already struggling to survive on the industry’s low wages are also victims of an alarmingly widespread pattern of illegal pay practices,” Miller said. “We already know that people working in fast food jobs are more likely to live in poverty, so we wanted to examine the business and labor practices that leave full-time workers in need of public assistance programs to get by.”

Settlement with NY attorney general. On Tuesday, March 18, New York Attorney General Eric T. Schneiderman announced that the state reached a $500,000 settlement with seven New York City McDonald’s franchises for failing to pay legally required laundry allowances, for uncompensated work time, and for unlawful wage deductions that resulted when cashiers were required to cover cash register shortfalls from their own pockets. Other violations included failure to pay workers an extra hour of pay at minimum wage when they worked more than 10 hours in a day, as required by New York law.

The settlement money will go to more than 1,600 workers “who were shortchanged by these franchises,” according to Schneiderman’s press statement announcing the settlement — the second to have come out of ongoing investigations of fast food employers by the attorney general’s labor bureau.