Recently, McDonald’s sued the City of Seattle to prevent them from treating individual restaurants as part of a larger business when it came to increasing the minimum wage. In case you missed it, last year the city voted to raise the minimum wage to $15 an hour. It’s going to be a slow, incremental process, with large business of over 500 employees having to increase wages faster than smaller businesses.
McDonald’s held the view that franchise stores should be treated as small businesses, but the city disagreed. So on March 10, 2015, the two went to court, and the court decided in favor of the city. The decision is based on evidence which shows that owners of franchises receive enough assistance from the company that they can be considered part of a larger (indeed very large) company.
This is a very recent decision, but it means that, starting April 1, 2015, McDonald’s will have to start phasing in wage increases following the faster of the two scales. It seems safe to bet that they’ll try to fight this in a higher court. That decision is binding in Seattle, but it also helps to set a new precedent for franchised companies, which have in the past used their business model to avoid the repercussions of individual stores violating labor laws.
In the future, we might see companies like fast food chains held responsible at the corporate level for things that, frankly, they should be keeping an eye on at the local level. It also means that fighting to organize workers in commonly franchised industries, often the lowest paying jobs, will get a real boost. If this becomes a precedent in other states or cities, then it becomes much harder to abuse the franchise system to avoid paying living wages.