California McDonald's workers win $26M settlement over wage theft

Dive Brief:

McDonald's cooks and cashiers in California reached a $26 million settlement on Monday over wage theft at corporate-owned stores across the state, according to a press release emailed to Restaurant Dive. The class action was originally filed in 2013 by a Los Angeles worker along with three other workers and involved alleged wage theft as early as 2009 on behalf of 38,000 cooks and cashiers across the state.
The suit claimed that McDonald's violated the state’s overtime rules, which requires workers to receive overtime when they work over eight hours in a 24-hour period. McDonald’s scheduling would attribute hours worked to the day the shift began rather when the work actually took place.
The suit also claimed the chain did not provide rest breaks or full meal breaks during busy times at the restaurant, and didn't reimburse employees for requiring them to clean and iron their uniforms.

Dive Insight:

McDonald's has been under hot water with employees lately. A class action lawsuit was filed in November, alleging the chain failed to act and prevent sexual harassment at a chain in Michigan, while a separate lawsuit claims it failed to address violence at a Chicago restaurant. In New Zealand workers won a $29 million settlement in November related to a holiday pay error. Local government officials and Democrats have also been urging McDonald’s to create more stringent anti-sexual harassment policies.

As part of the most recent settlement in California, McDonald's agreed to provide a one-hour wage premium to each crew member each day the company doesn’t provide a full, timely meal period or rest break; allow workers to leave the restaurant during meal breaks without restriction; maintain detailed electronic time records that track each meal period or break; provide uniforms to crew members whenever they are stained or greasy; and no longer make workers take rest breaks when their shifts start or ends out of convenience to the store over the worker.

Setting this precedent in California could push other workers to file lawsuits over wage violations depending on individual state laws, especially with the company under the microscope at the moment. Workers have been pushing to unionize and fighting for a $15 minimum wage, which up until March, McDonald's had lobbied against. The company has since said it thinks that wages should increase over time.

A majority of McDonald's system is franchised and owned by independent operators, which makes liability hard to pinpoint and who should provide training and oversight at the store level for different issues and who is ultimately liable when violations originate at the store level. One of the issues related to sexual harassment, for example, is that while many of the franchise operators received training, it hasn't necessarily reached store managers and employees.

The Department of Labor is in the midst of finalizing regulations over joint employment, which could provide clarity on whether multiple employers could be liable for various employment violations, but that won't be decided until December. Even if new rules give McDonald's the ability to not be involved in franchisee employment violations, it's unlikely to dissuade employees from going after the company, especially since many have pushed for class action status already.