On March 19, 2018, McDonald’s reached a proposed settlement with the National Labor Relations Board (the “Board”) to resolve the outstanding litigation concerning alleged labor law violations by McDonald’s franchisees. We previously reported on this case in both 2014 and 2015, stating that the pertinent issue for employers was whether McDonald’s USA should be considered a joint employer with its franchisees, making it liable for their labor law violations. Since the inception of this matter, the Board has changed the standard as to what constitutes a joint employer relationship at least twice. (See our alerts here and here).

The settlement agreement between McDonald’s and the Board must still be approved by the Administrative Law Judge currently presiding over the matter. The proposed settlement, however, is reported to provide the charging parties with full backpay for the alleged violations while not requiring McDonald’s to admit to any wrongdoing. Significantly, the settlement leaves open the question as to whether McDonald’s is a joint employer with its franchisees, providing no precedent for employers to follow.

As a result, the expanded joint employer test under Browning Ferris stands for now, but as we previously reported, we expect that the Board will revisit this standard once it is at full strength with a Republican-majority Board.

We will continue to follow the proposed settlement in the McDonald’s case and report any significant updates.