When entrepreneurs buy fast-food franchises from, say, McDonald’s, the contracts they sign give them considerable independence in hiring and firing employees and establishing wages and benefits. State and federal regulators have long recognized this separation between corporation and franchisee, but if a recent, baseless order from the National Labor Relations Board’s top prosecutor stands, that separation could disappear — and unions will get a huge boost in their long-running efforts to organize the fast-food industry and win a job-killing minimum wage increase.
In response to unfair labor practice complaints brought by McDonald’s employees, who assert they were improperly disciplined for leaving work to participate in Service Employees International Union demonstrations in favor of wage hikes, the NLRB’s Richard Griffin said McDonald’s must be considered a “joint employer” of the workers at all of its restaurants, even though nearly 3,000 franchises are privately owned.
McDonald’s argued that it shouldn’t be considered a joint employer, citing established laws regarding business franchising. Under those laws, labor organizers have to approach and organize employees at each individual franchise — an effort of such scope and cost that unions won’t bother trying. But if Mr. Griffin’s action is upheld by the courts, it would allow unions to organize all employees within an entire company — at both the corporate and franchise levels — at the same time. Not surprisingly, Big Labor is thrilled.
The ruling is yet another overreach by the Obama administration, and one that shouldn’t withstand legal scrutiny. Not only is it a direct attack on fast-food franchises, it’s a threat to the 770,000 franchised businesses in multiple industries across the United States, as well as the one in eight U.S. workers who are employed by them.
Unions want us to believe that this is a noble battle. They want us to view low-paid workers as victims of greedy, wealthy corporate overlords. In reality, unions want to rig the game to make it as easy as possible for them to sign up new dues-paying members and fatten their already generous political contributions. And their disingenuous promise to lift workers out of poverty with a $15 minimum wage would harm more workers than it would help.
Minimum wage jobs are not supposed to be long-term, “living wage” positions. They are designed to be short-term, entry-level positions that help young workers, and teenagers in particular, learn how to interact with co-workers and customers, show up on time and consistently complete basic tasks — things that employers can’t afford to pay twice the national minimum wage for. If employers are forced to pay low-skilled workers a higher minimum wage, they are going to look for workers with more than minimum skills — especially with so many older workers looking for any job they can get — or replace more workers with automation.
The NLRB, with President Barack Obama’s full support, has declared war on small businesses, including thousands of Nevada operations. Is there no limit to the economic harm this administration has caused?