The New Law Both Fast-Food Workers and Franchise Owners Love
McDonald’s doesn’t set the wages for its employees. It doesn’t determine their hours, manage their overtime, or deal with swapping schedules when an employee gets sick. No, the person who takes orders for Big Macs and McDonald’s french fries is employed by the franchise owner—and the same goes for the majority of national fast-food chains. Save for a small number of corporate-owned locations, most burger joints and drive-through Tex-Mex places are owned by franchisees.
That’s long been an excuse used by corporate parents like McDonald’s to distance themselves from disputes over hourly pay, wage theft, and other issues that have plagued both the chain and the industry in recent years. But like many things in the world of burger slinging, that structure is changing. First came July’s National Labor Relations Board ruling that McDonald’s Corp. bears responsibility for the actions of its owner-operated franchises. Following that national ruling, this week the California State Legislature in is expected to pass S.B. 610, the California Franchise Relations Act, bolstering the rights of franchise owners—and potentially giving them the freedom to pay their workers a living wage without facing the ire of their corporate parents.
See, many franchise owners hate fast-food corporations nearly as much as their low-wage employees do. Kathryn Carter, who owns a McDonald’s, told the California branch of the Service Employees International Union, “Corporate headquarters control nearly every aspect of our business—we can be punished for speaking out or joining with other franchise owners to improve business conditions.”
While she and other owner-operators are thrilled at the prospect of the bill, fast-food parent companies are decidedly not.
SEIU, which supported the bill, believes it will lead to increased wages for California’s fast-food workers, many of whom are paid the state minimum wage of $9. While that’s better than the federal minimum wage, $7.25, the cost of living can be exceptionally high in the state: A recent study from UCLA found that Los Angeles has the least-affordable rental market in the country, for example.
The day-to-day involvement of corporate-parent companies in the business of owner-operated restaurants can make life difficult for employees in ways that have little to do with wages. When class action lawsuits were filed against McDonald’s in three states in March, former and then-current employees alleged that the parent company was intimately involved in a scheme to tightly control labor costs that they said amounted to systematic wage theft.
“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,” B.J. Chrisholm, an attorney working on the California class action lawsuit, told me at the time. “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.”
If the state gives franchises owners increased independence, practices like that could be a thing of the past in California.