Rice Enterprises, a McDonald’s franchisee in Pennsylvania, has settled a lawsuit filed on behalf of a former 14-year-old employee who was raped by a restaurant manager. Rice settled for $4.35 million, according to a press release from the plaintiffs’ lawyers, which was emailed to Restaurant Dive.

A spokesperson for the plaintiffs’ attorneys said that McDonald’s is not contributing to the settlement and has not admitted any liability in the case. McDonald’s wrote in a statement emailed to Restaurant Dive that it was released from any legal claims as part of the settlement. 

According to the lawsuit, McDonald’s and Rice Enterprises were both aware the manager, Walter Garner, was sexually harassing children employed by Rice before Garner raped the employee mentioned in the suit. Garner, a registered sex offender, later pleaded guilty to criminal charges stemming from that incident and is incarcerated.

A pattern of abuse

Rice Enterprises said that as soon as it became aware of the complaint against Garner in 2021, it terminated his employment. 

“[We] offered our full support to the impacted employees and law enforcement investigating this case.” Rice Enterprises said in a statement. “Since then, we’ve redoubled our efforts to ensure a positive and respectful experience for all employees in our restaurants, and our organization maintains a zero-tolerance policy for harassment of any kind.”

Before Garner sexually assaulted the 14-year-old employee in February 2021, he had already made the restaurant “an objectively hostile and abusive work environment for women” through continual sexual harassment and unwanted touching of multiple female employees, including another minor, according to the lawsuit. Several of the employees, including the 14-year-old worker, spoke to the hiring manager about Garner’s conduct. 

McDonald’s, according to the complaint, took no action. Garner raped the employee in February 2021 and later coerced her into sexual acts on at least one other occasion. He continued to sexually harass her and other employees, per the complaint. Shortly thereafter, the lawsuit alleges, managers for Rice Enterprises saw Garner groping female employees on security footage while investigating an alleged theft from the cash register. Garner was emboldened in his abuse after “McDonald’s management spoke to Garner about the conduct viewed on video but did not discipline or fire him,” the suit states. 

In August 2020, according to a police report inspected by Restaurant Dive, a father of workers at another McDonald’s location called the local police after discovering Garner, who messaged his daughter on Facebook, was a sex offender.  In April 2021, Garner showed pictures of the 14-year-old victim to another employee he was targeting. This employee contacted her school administrators, who then contacted local police. The police arrested Garner. Once Rice learned of the arrest, they fired Garner.

The lawsuit alleges the 14-year-old employee did not receive any training on what constituted sexual harassment or how to report it until after Garner was arrested. Rice wrote in an email that its employees received respectful workplace training upon hire.

Questions of liability

The suit initially raised joint-employer liability questions, as the plaintiff was hired through the McDonald’s Careers website. 

The lawsuit argued that McDonald’s exercised strict control over working conditions at all franchised restaurants, including the physical work environment and required training, as well as staffing levels, discipline and terminations. The suit said the guidance provided by the company on sexual harassment was “entirely inadequate and ineffective.” In 2021, McDonald’s said it would require all restaurants to have anti-harassment training by 2022. 

According to a pending rule issued by the National Labor Relations Board last year, which is set to take effect in late February, franchisors that exercise reserved control over “work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline; the tenure of employment, including hiring and discharge; and working conditions related to the safety and health of employees,” can be found liable for franchisee violations of labor law.

The Restaurant Law Center and Chamber of Commerce are fighting that rule in court, while the International Franchise Association formed a law center specifically to fight efforts to strengthen joint employer rules late last year. In January, the House of Representatives voted to back a measure overturning the proposed rule; that measure is currently before the Senate.

Alan Perer, an attorney for the 14-year-old employee, said in a press conference Monday the settlement was accepted to avoid the psychological cost of a trial.

“Faced with the decision of proceeding through a trial after two years of litigation to let a jury determine the ultimate responsibility of McDonald’s and Rice, we determined it was in our client, L.H.’s, best interest to settle the case rather than have her suffer the additional trauma and stress of going through a trial and having to relive the horror of what happened,” Perer said. “For a company to allow a known sex offender to have access to and control over young teens turns America’s best first job into a nightmare for those teens.”

McDonald’s did not comment on what procedures the company uses to ensure sex offenders do not manage children or on the control exercised over franchisee operations. McDonald’s has been slapped with a number of child labor cases in recent years.

Rice Enterprises went bankrupt last year, after the suit was filed, in an effort to reduce litigation expenses. It will fund the settlement by the sale of its restaurants. Perer said during the press conference filings in Rice’s bankruptcy case revealed “McDonald’s corporate spent over $2.5 million paid to its lawyers to fight the case.”