McDonald’s Facing Antitrust Class Action Over Alleged Wage-Suppression Conspiracy

McDonald’s is the defendant in a massive proposed class action lawsuit alleging the company and its franchises enter into anti-competitive, conspiratorial “no-solicitation and no-hiring” contracts by which franchisees agree not to recruit or hire each other’s employees. The 34-page lawsuit claims defendants McDonald’s USA, LLC and McDonald’s Corporation were instrumental in orchestrating an agreement with franchisees that represents a “naked horizontal restraint of competition and a per se violation” of federal antitrust laws.

The lawsuit, in no uncertain terms, alleges McDonald’s, which serves roughly 68 million customers daily across 120 countries, and its franchisees, by way of the parties’ alleged “no-hire, no-solicitation” clause within franchise agreements, have colluded to suppress the wages of restaurant-based employees nationwide.

Franchise Agreements

According to the lawsuit, filed in Illinois, McDonald’s franchise agreements contain a clause that expressly prohibits franchisees from “employ[ing] or seek[ing] to employ any person” who currently is or within the preceding six months has been employed by McDonald’s, any of its subsidiaries, or any other franchisee. The plaintiff argues McDonald’s alleged no-hire clause handcuffs employee mobility and bargaining strength while amplifying the company’s market power and, ultimately, eliminates franchisees’ incentives to compete for workers.

“This agreement, far from being a ‘commitment to [its people],’ instead harmed employees by lowering salaries and benefits they otherwise would have commanded in an open marketplace, and deprived such employees of better job growth opportunities,” the lawsuit alleges.

Pertinent Language     

The case includes the following item included in McDonald’s franchise agreements:

The lawsuit notes McDonald’s has an estimated 420,000 employees throughout the United States.

McJobs: “Treat burn injuries with condiments such as mayonnaise and mustard”

An entire section of the complaint is dedicated to claims that McDonald’s has continually sought to reduce labor costs primarily through cutting wages. The lawsuit claims McDonald’s, from introducing in 1999 electronic kiosks to replace workers in some states to helping its franchise owners quell union-backed strikes demanding living wages, has done everything in its power keep employees’ pay below what is considered livable.

The case highlights incidents in March 2015 when McDonald’s workers in 19 cities filed 28 health and safety complaints with the Occupational Safety and Health Administration (OSHA) over “low staffing, lack of protective gear, poor training and pressure to work fast” that resulted in workplace injuries. Those complaints also noted some franchises lacked first aid supplies, according to the lawsuit, adding some workers were allegedly told by management “to treat burn injuries with condiments such as mayonnaise and mustard.”

In 2003, Merriam-Webster’s Collegiate dictionary, despite McDonald’s objections, added to its lexicon “McJob,” defined as “a low-paying job that requires little skill and provides little opportunity for advancement.”

The plaintiff’s alleged experience

Though the lawsuit was filed in Illinois, the plaintiff is an Orange County, Florida resident who worked for a franchised McDonald’s in Apopla, Florida. She claims the alleged collusion between McDonald’s and its franchisees caused her to lose wages and “professional growth opportunities,” as well as endure illegal working conditions. The woman claims she sought a position at a nearby McDonald’s franchise for which she would have made substantially more money, but was unable to switch jobs due to the defendants’ anti-competitive practices “simply because she was currently employed by another franchise.”

Hired as an entry-level crew worker for $7 per hour, the plaintiff claims she was eventually promoted to Department Manager of Guest Services for $12 per hour. After this raise, the plaintiff became eligible for a general manager role. The lawsuit alleges the plaintiff, after taking weeklong training classes over the phone and online and having to complete the company’s “Hamburger University” course— while working substantial overtime hours for no time-and-a-half pay—her supervisors discovered she was pregnant and canceled her upward training.

“It was clear that this franchise that had suppressed her wages and abused overtime laws was now going to hinder her McDonald’s system education and promotion because she was pregnant,” the case reads, adding the plaintiff immediately decided to look elsewhere for another managerial job.

The plaintiff came across an opportunity to be a departmental manager with a starting salary of $13.75, a 15 percent raise from her current pay rate. Although the franchise where this role was located expressed interest in hiring her, the complaint says, the company said they could not because she was currently employed by another McDonald’s franchise. After, the plaintiff’s request to be released by her current franchisee but was denied because she was “too valuable,” the complaint says.

Who is included in the class for this lawsuit?

This lawsuit proposes to cover anyone in the US who is currently or was formerly a McDonald’s employee or manager at any McDonald’s restaurant, whether operated by McDonald’s itself or by a franchisee. Alternatively, the case includes a Florida-only subclass of current or former McDonald’s employees or managers.

The full complaint can be read below.