McDonald's pays $26 million to settle wage theft suit
Posted November 25, 2019 9:00 a.m. EST
CNN — McDonald's is paying $26 million to settle a class action lawsuit over wage theft. It's the latest development in a string of conflicts between the major restaurant chain and its employees.
The settlement puts an end to a multi-year legal battle between the company and California workers who alleged that McDonald's was skirting overtime payment laws and denying employees timely breaks, among other things. About 38,000 people are represented in the suit, according to a court filing obtained by CNN from the Fight for $15, which advocates for workers' rights.
In 2013, Maria Sanchez and others filed a suit against corporate-owned McDonald's restaurants in the state, saying that as far back as 2009 McDonald's failed to pay overtime to employees who worked more than eight hours during a 24-hour period. McDonald's actions violated state law, the suit claimed.
"While we continue to believe our employment practices comply with the California Labor Code, we have decided to resolve this lawsuit," McDonald's responded in a statement.
The company added that "we take our responsibility as an employer seriously and are deeply committed to the fair treatment of all of our employees," noting that it "continuously" rolls out trainings and offers resources at company-owned restaurants to "promote continued compliance with all wage and hour laws."
The vast majority of McDonald's locations are owned and operated by franchisees. Those locations are encouraged to follow the same rules and procedures as corporate-owned locations, but are not required to do so.
In addition to paying out the $26 million, McDonald's will periodically train employees at corporate-owned California restaurants on their rights, like receiving 10-minute breaks roughly every two hours and getting new uniforms, at no cost, to replace ones that have been worn out or damaged on the job.
McDonald's has been accused of underpaying by other workers, as well.
In 2014, employees in Michigan and New York filed class-action suits over wage theft. At the time, the company said it was "committed to undertaking a comprehensive investigation of the allegations and will take any necessary actions." In 2016, the company agreed to pay $3.75 million to settle a separate wage theft class action suit in California, where workers in franchise locations made similar accusations.
Just last week, McDonald's agreed to pay what could be tens of millions of dollars to New Zealand employees for miscalculating holiday wages.
Other fast food companies have been hit with similar lawsuits over the years, suggesting that the problem extends beyond McDonald's.
But the burger chain, which at the end of 2018 employed about 210,000 people globally, has been particularly scrutinized for its labor practices.
Earlier this month, a former employee filed a class action sexual harassment suit against McDonald's with the help of the American Civil Liberties Union and the Time's Up Legal Defense Fund. The suit alleges that McDonald's "creates and permits a toxic work culture from the very top." The plaintiffs are seeking at least $5 million in damages, as well as better protections from the company.
In response to that lawsuit, McDonald's said in a statement that it "is demonstrating its continued commitment to this issue through the implementation of Safe and Respectful Workplace Training in 100% of our corporate-owned restaurants." The company added that it is "encouraged by the partnership and commitment," from franchise groups — which aren't required to follow such corporate policies, and make up the majority of McDonald's restaurants — to train staff according to corporate regulations.
Fight for $15 says that over the course of three years, workers have filed over 50 complaints and suits against the company.
Former CEO Steve Easterbrook responded to those suits by noting that McDonald's started working with the anti-sexual violence organization RAINN last year to help clarify its sexual harassment policies and reporting methods. It also conducted manager and operator trainings last fall, opened a hotline and more.
"We are committed to creating and sustaining a culture of trust where employees feel safe, valued and respected," Easterbrook wrote in a letter at the time.
Easterbrook has since been terminated for violating company policy by engaging in what the company called a consensual relationship with an employee.
Last month, McDonald's USA started training staff on how to mitigate violence, how to report harassment and reduce unconscious bias, among other things.