Allegations of Illegal Pay Practices Lead Miller and Courtney to Question Fast Food Companies’ Labor Policies
WASHINGTON—Fast food workers already struggling to survive on the industry’s low wages are also victims of an alarmingly widespread pattern of illegal pay practices. To learn more about the policies behind this reported abuse, senior Democratic members on the House committee with jurisdiction over labor laws today requested detailed information about the business model and labor practices at five of the nation’s largest fast-food companies.
Citing numerous reports of wage theft and the large percentage of fast food employees who must rely on public assistance, Reps. George Miller (D-Calif.), the senior Democrat on the House Education and the Workforce Committee, and Joe Courtney (D-Conn.), ranking member on the Subcommittee on Workforce Protections, sent letters to the CEOs of McDonald’s, Yum! Brands, Burger King, Papa John’s, and Wendy’s. The letters seek to gain insight into the companies’ “labor policies and practices vis-à-vis” their “franchise relationships nationwide.”
“These letters are a result of our growing concern about labor practices that can drive up income inequality; stymie economic growth; and strain local, state, and federal finances,” said Miller and Courtney. “In the past year, we have seen workers across the country protesting for higher wages. We already know that people working in fast food jobs are more likely to live in poverty, so we wanted to examine the business and labor practices that leave full-time workers in need of public assistance programs to get by.”
Recent studies have detailed the extent of the wage and hour law violations in New York City, Los Angeles, and Chicago. And press reports highlight fast food workers across the country who allege that they have been denied their rightful wages by their employers. Reps. Miller and Courtney are interested in looking into how those issues are addressed in the companies’ franchise agreements.
This effort is part of the congressional Democrat’s broader agenda to support working families, which involves ensuring that no one who works full time has to raise their family in poverty. Yet one in five families with a member holding a fast food job has an income below the poverty line. The Fair Minimum Wage Act (H.R. 1010), a bill authored by Miller and co-sponsored by Courtney, would raise the federal minimum wage from $7.25 to $10.10 per hour over three years and index future annual increases to inflation thereafter. According to the Congressional Budget Office, a minimum wage of $10.10 per hour would give 25 million workers a raise and lift nearly a million Americans out of poverty.
All five letters were nearly identical. Read one of the letters below:
March 6, 2014
Mr. Don Thompson
President and Chief Executive Officer
McDonald's Corporation
2111 McDonald's Drive
Oak Brook, IL 60523
Dear Mr. Thompson:
To better understand the business dynamics at work in low-wage but profitable industries with reportedly high rates of both wage theft and employee use of public assistance, we are writing to gain insight from a number of executives of restaurant franchisors. As senior Democratic members of the U.S. House Committee with jurisdiction over our nation’s labor laws, we respectfully request information about McDonald’s labor policies and practices vis-à-vis its franchise relationships nationwide.
As you are well aware, millions of American workers rely on fast food industry jobs to provide for their families. Many of these workers struggle to survive on the low wages offered in the industry, and more than half of them rely on some form of public assistance to supplement their low wages. It has been reported that 52 percent of all fast food workers receive public assistance, such as food stamps, at a cost of $3.8 billion to taxpayers. According to a recent report, for example, the McDonald’s workforce relies on $1.2 billion in annual public aid benefits.
Additionally, media coverage points to an alarmingly widespread pattern of illegal pay practices at fast food establishments. A recent study of New York City fast food workers found that a startling 84 percent of workers had personally experienced a violation of wage and hour laws.
A 2009 study, with over 4,300 respondents in New York City, Los Angeles, and Chicago, found that 68 percent of workers in low wage industries reported experiencing a pay violation in the previous week with an average loss of $51 per week out of average weekly earnings of $339. Assuming fulltime year-round work, these workers lost $2,634 annually, out of total earnings of $17,616 – a significant amount for a working family.
Press reports show that the form that wage theft takes in these restaurants is wide-ranging. A Papa John’s Pizza worker in St. Louis has said she was regularly required to work before clocking in and after clocking out, providing free labor for two to four hours every week. A KFC worker in New York City has said he worked nearly 80 hours per week but never received overtime pay. A New York City McDonald’s employee has alleged losing up to $75 every month because she was not compensated for the time spent counting the money in the register before and after her shifts. A Kansas City Burger King employee has alleged that she lost roughly $1,300 each year because managers tampered with payroll documents to avoid paying overtime hours. A former employee of Qdoba Mexican Grill in Seattle alleged that a manager simply failed to provide him with his final paycheck after he resigned his position, despite repeated requests.
Concern is growing about the fast food industry’s labor practices. For example, the New York State Attorney General (NYAG) has initiated a robust investigation into the wage and hour practices of the fast food industry. The NYAG has even had to intervene to stop fast food employers from firing workers for simply complaining about wage and hour violations.
American corporations like McDonald’s rightfully take great care in protecting their brand. Presumably, franchise agreements reflect this value, with assurances about the quality and uniformity of things like the menu, the food products, and restaurant appearance. But pervasive wage and hour violations and low wages do not reflect any better on a brand than do wayward menu items or inconsistent cooking times.
For us to fully understand McDonald’s workplace wage and hour policies and practices, we respectfully request that you provide us with the following information:
- A copy of your standard franchise agreement, including any attachments, manuals or policies provided to franchisees which reference wages, hours, and other labor standards.
- A copy of training materials and guidance:
- Provided to managers of corporate-owned restaurants and franchise owners or their managers regarding shift management and labor costs, including instructions on how to record hours and payroll.
- Provided to franchise owners, employees at franchisee restaurants, or employees at corporate-owned restaurants, regarding compliance with wage and hour laws, including employee handbooks.
- A detailed explanation of how your corporation oversees its franchisees, especially franchisee wage, hours, and other labor practices.
- A detailed explanation of how your corporation addresses noncompliance with franchise agreements, especially with respect to any wage, hour, or other labor standards.
- A detailed explanation of the steps your corporation takes, if any, to prevent wage and hour violations of local, state, and federal laws at both franchisee restaurants and corporate-owned restaurants.
- A detailed explanation of how your corporation handles violations of wage and hour laws by franchisees, including whether your corporation keeps track of the number of wage and hour violations committed by franchisee restaurants and whether your corporation terminates or otherwise disciplines franchisees for such violations.
- The number and location of alleged violations of local, state or federal wage and hour laws that have been committed by your franchisees and corporate restaurants from January 1, 2009, to present, and how those allegations have been resolved.
We thank you in advance for your attention and cooperation with our request. Please direct your staff to coordinate your response with Ms. Leticia Mederos, Democratic Labor Policy Director, who can be reached on (202) 225-3725.
Sincerely,
GEORGE MILLER
Senior Democratic Member
JOE COURTNEY
Ranking Member
Subcommittee on Workforce
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