Guest Post: McDonald’s and Fast Food Forward

Heather Whitney is a Lecturer in Law and Bigelow Teaching Fellow at the University of Chicago.

In the wake of its steepest monthly drop in US same-store sales in more than 14 years, the WSJ reports McDonald’s is now looking at which type of charitable partnership it might forge to lure millennials back to its golden arches. This philanthropic angle is pure dollars and sense: millennials care about giving back and prefer brands associated with good corporate citizenship. There’s a market for good works and McDonald’s wants in.

With Fast Food Forward (FFF) showing no signs of slowing down and the success of minimum wage increases on the November ballot, there may be an opportunity here for McDonald’s to kill two birds with one stone. That is, regain millennial business as a rebranded “conscious capitalist” by working with FFF to provide workers at least some of what they want: better pay and better jobs.

As I discuss in my upcoming Article, the development of alternative forms of worker organizations together with the burgeoning consumer demand for companies that “do well by doing good” portend a future where companies can partner with labor to improve jobs strategically, as a way to gain “conscious consumer” market share. The issue, though, is whether such partnerships violate section 8(a)(2) of the NLRA or 302 of the LMRA. And that comes down in large part to whether FFF and associations like it are “labor organizations” under section 2(5) of the NLRA at all. The answer is far from clear, but given that such partnerships present an opportunity to channel consumer demand for conscious capitalism into market-based solutions for bad jobs for workers and dropping sales for companies, it’s worth thinking through the benefits of such associations remaining outside the Board’s purview. Below I sketch out one potentially lucrative company-labor partnership and the subsequent labor organization analysis.

The Partnership

Returning to McDonald’s, imagine their research shows that millennials find eating at McDonald’s depressing. Yes the food is unhealthy, but a 1285-calorie Chipotle burrito isn’t so great either and Chipotle is doing well. No, what is particularly depressing about McDonald’s is the feeling that the people behind the counter, flipping burgers and taking orders, have dead-end jobs where they’re treated poorly. This feeling is a big turnoff for millennials who want to buy a feeling (fresh, happy, ethical) more than a meal. And, as a result, has led them to spend a little more to go to restaurants that provide those feelings. Currently, that means places like Chipotle, which promote good environmental and animal practices and are known for better pay.

Given McDonald’s findings, it knows partnering with a plant-a-tree foundation will not bring millennials back, at least while fast food workers continue to strike. To get millennials back, McDonald’s needs to become the Christmas-morning Ebenezer Scrooge of fast food. Imagine they come up with the following plan:

  1. Sit down with FFF leaders and propose working together to come out in favor of a higher minimum wage. Make a large donation to FFF in order to help it gain more traction across the country (while promoting McDonald’s as a newfound conscious capitalist). Fund the creation of the “FFF Restaurant Seal of Approval,” a designation restaurants can earn by committing to a set of worker pay and work condition practices. Create a joint committee with Fast Food Forward that sets and revises these standards on a regular basis.
  2. Announce McDonald’s as the first FFF-sealed restaurant.
  3. Impose an $11/hr wage floor for workers – that’s 50 cents to $1 more than In-and-Out and possibly $2.50 more than Chipotle.
  4. Continue funding FFF’s campaign to raise the minimum wage (which raises wages, most significantly, for McDonald’s competitors).
  5. Roll out the marketing pitch to millennials: eating at McDonald’s buys better jobs.

The Legal Question

While the above transformation may seem a stretch, the November elections suggest the minimum wage is going up either way. Given this, a proactive wage increase paired with a “conscious capitalist” campaign with FFF is a smart way to recapture millennial dollars with minimum long-term costs. The question, again, is whether such a partnership violates the law. And the first step to answering that is figuring out whether FFF is a “labor organization” such that company financial support of it could be prohibited.

The National Labor Relations Act defines “labor organization” broadly, as any organization that has: (1) employee participation; (2) exists, at least in part, for the purpose of dealing with employers where (3) those dealings concern grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work. When there is debate on whether a particular organization meets this definition, it tends to center on the meaning of “employee participation” and “dealing with.”

  1. Employee participation

There have to be “employees” and those employees must “participate.” In the FFF context, employee participation seems clear – fast food employees are marching and striking.

  1. Exists, at least in part, for the purpose of “dealing with” employers

This is the core issue; speaking colloquially, what sort of FFF-McDonald’s dealings count as “dealing” under the Act. FFF exists, at least in part, to push employers to change their labor practice (and McDonald’s the franchisor was an employer of at least some employees even before the Board decision to treat it as a joint employer of its franchisees’ employees). And if FFF and McDonald’s meet regularly to set standards for the FFF restaurant seal, there may also be continuous dealing. In short, depending on how McDonald’s and FFF hash out the practices required for receiving a FFF seal, it may look not so different from traditional collective bargaining negotiations, except FFF was not necessarily chosen by a majority of McDonald’s workers as their bargaining representative.

Bottom Line

How the Board defines “labor organization” has real-world implications for how companies that promote themselves as “conscious capitalists” can express and meaningfully commit to those selling points in practice. Putting aside the First Amendment questions that lurked in Mulhall, my own view is that even if the ban on company support withstands constitutional scrutiny, a broad reading of either “labor organization” or the ban is bad for everybody. Companies that want to sell conscious capitalism are deprived of the opportunity to forge the labor partnerships that would set them apart from competitors, consumers committed to buying from companies aligned with their own moral commitments are deprived of the opportunity to see the labor-company partnerships that more clearly signal the authenticity of those commitments, and workers lose out on a chance to make bad jobs better.