The ongoing series of one-day strikes held by fast-food workers over the past year or so have shed light on the difficulties of living on a minimum wage. Workers at chains like McDonald’s have gathered in front of locations around the country to chant that they can’t survive on $7.25. Their fight for a $15 base wage and the right to form a union has focused on employers’ reluctance to boost pay much above the legal minimum. Today, however, class action lawsuits filed on behalf of current and former McDonald’s employees in California, Michigan, and New York allege that the chain and its franchisees are often paying workers less than the little they’re owed by manipulating hours, requiring employees to clock out for breaks and meals, not paying for overtime, and using other measures of controlling labor costs that amount to wage theft.
A suit filed on behalf of Jason Hughes and Ryan Schuetz in Alameda County, California, alleges that “unlawful stratagems” such as not paying for all hours worked are used “to comply with McDonald’s requirement that labor costs at its franchised restaurants may not exceed a designated, and artificially low, percentage of the restaurant’s gross sales.” Schuetz, for example, was told that the franchise owner, Fremak Arches Inc., didn’t pay overtime—an alleged violation of federal mandate and various state statutes.
The complaint is one of three filed in California, but it is an argument that all of the class action lawsuits are making: Despite the owner-operated corporate structure, McDonald’s control over franchise owners makes it both an employer and a coconspirator in the wage-theft activities. According to the lawsuit, rather than addressing these workplace concerns, McDonald’s is “accepting and profiting from the unlawful conditions under which they work.”
“We believe that what’s happening is that McDonald’s corporate imposes all sorts of restrictions and controls and rules on the franchisees, including on working conditions for the crew members,” said B.J. Chrisholm, one of the attorneys representing the California cases. “It's that level of control that we’re alleging makes McDonald’s an employer, or a coconspirator.” She estimates that between 20,000 and 30,000 current and former McDonald's employees could be affected by the class action suits in California alone.
A major means of that control is the corporate computer system the franchises are required to use, which not only has point-of-sale software but functions as a time punch for employees and allegedly monitors each store's labor costs on a real-time basis.
“It’s our understanding that both the managers and McDonald’s monitor what percentage of overall sales go to labor at any point in time,” Chrisholm said. “It’s really the sort of obsession with keeping that labor number low that results in a lot of the practices that we’re seeing in the restaurants.”
She says that managers have explained to her that during a slow period they’ll check the labor-sales ratio as frequently as every 10 minutes. If it starts to dip, workers might be required to clock out for breaks or meals.
The lawsuit says that Hughes has been “required to punch out immediately after beginning his scheduled shift and wait for a period of fifteen minutes to half an hour before punching back in,” when management told him the schedule had been changed despite no one informing him. That time spent standing around at work while not clocked in is time he was not compensated for.
“I knew I wouldn’t be making a lot of money, but I thought a well-known company like McDonald’s would treat me fairly—at the very least follow the law,” Hughes, who still works at McDonald's, said on a press call today. “We brought this lawsuit because neither has happened.”
When asked for a comment, the chain provided a written statement from Heidi Barker Sa Shekhem of McDonald's global external communications department. “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,” it reads. “We are currently reviewing the allegations in the lawsuits. McDonald’s and our independent franchisees are committed to undertaking a comprehensive investigation of the allegations and will take any necessary actions as they apply to our respective organizations.”
Coming just weeks after admitting in a Security and Exchange Commission filing that the growing labor movement “can adversely affect us” and could push the corporation to raise wages, this hasn’t been a good month on the labor front for McDonald's. Despite that, Chrisholm doesn’t see the lawsuits as the response of a workforce emboldened by the strikes.
“We know that a lot of these practices have been going on for a while, and there have been some lawsuits in the past from McDonald’s," she said. “So I think that at this point we thought we had enough evidence to go forward with a case.”