Fast food workers across the US complain that the wages they receive (the current federal minimum wage of $7.25 per hour (£4.75) are not enough to live on. Many need government handouts in the form of Medicare and food stamps despite working long hours.
The campaign has huge backing from unions and even President Obama lent his voice to the cause:
All across the country right now there’s a national movement going on made up of fast-food workers organising to lift wages so they can provide for their families with pride and dignity.
In the UK, the Bakers, Food and Allied Workers Union hosted a delegation of US fast food workers to share news of their strike movement for $15/hr (equivalent to about £10), and they will be raising the demand for £10/hr in the UK on the global day of action for Fast Food Rights on 15th April 2015.
The Fight for $15 campaign has continued in the face of repression from the government and alleged intimidation from managers at fast food outlets with McDonald’s at the centre of numerous controversies.
In May 2014, over 100 people were arrested at a peaceful protest that shut down the McDonald’s HQ in Illinois. In September, over 500 striking workers were arrested in cities across the country as they joined a one day strike and picketed various restaurants including McDonald’s.
In July, a special report from Bloomberg found that McDonald’s fired nine workers in New York between November 2012 and April 2014 for joining unions and helping organise workers. Workers also faced suspension and reduced working hours for being involved in forming unions.
Based on these reports, in December 2014 the US National Labor Relations Board issued 13 complaints containing dozens of charges against McDonald’s and many of its franchisees for violating workers’ rights to press for better pay and working conditions.
The New York Times reported that alleged violations involved actions against workers who supported the protests. These included threats, surveillance, interrogations, firings, discriminatory discipline, reduced hours and excessive restrictions on conversation about unions or work conditions. Managers were also accused of offering promotions in exchange for giving up the fight.
Importantly for the striking workers and the wider campaign, the NLR Board held McDonald’s jointly responsible with the franchisees. This undermines McDonald’s long held claim that they bear no responsibility for workers’ rights which they say are the sole responsibility of the franchisees.
The Board’s ruling stated that McDonald’s, “through its franchise relationship and its use of tools, resources and technology, engages in sufficient control over its franchisees’ operations, beyond protection of the brand, to make it a putative joint employer with its franchisees, sharing liability for violations of our Act.”
Mary Kay Henry, the head of Service Employees International Union told Business Week, “The franchisee relationship is a smokescreen so corporations don’t have to take responsibility for paying more. Every detail of food preparation is centralized. With that level of coordination, workers believe that corporations could figure out how to pay them more.”
Litigation based on the Board’s reported violations was being heard when Ethical Consumer went to press in April 2015.
The company faced further litigation in January 2015 when ten people filed a law suit against them in a US court over racial discrimination. Ten former McDonald’s workers in Virginia claim that supervisors sacked them because the stores had “too many black people”. The employees say they overheard their supervisors talk about the “need to get the ghetto out of the store”, and “get rid of the niggers and the Mexicans”. The action was taken jointly against McDonald’s and the franchise owner.
The decision by the National Labor Relations Board to hold McDonald’s equally responsible in the suit is likely to impact on the these proceedings. One of the plaintiffs, Pamela Marable, told the Guardian, “McDonald’s closely monitors everything we do, from the speed of the drive-thru line to the way we smile and fold customers’ bags – but when we try to tell the company that we’re facing discrimination, they ignore us and say that it’s not their problem.”
We gave all the companies a mark in the Workers’ Rights column for low pay because it is endemic in the industry and none of them were found to be paying a Living Wage.
Tax avoidance on the menu at McDonald’s
A damning report has revealed that McDonald’s avoided over €1 billion in tax between 2009 and 2013.
The report outlines how the company moved its European headquarters from the UK to Switzerland and used intra-group royalty payments, channelled into a tiny Luxembourg-based subsidiary with a Swiss branch, to avoid paying the full rate of corporation tax in a number of European countries including the UK, Spain and Italy.
The ‘Unhappy Meal’ report is co-authored by a coalition of European and American trade unions (EPSU, EFFAT, and SEIU), representing 15 million workers in different sectors of the economy across almost 40 countries, as well as UK-based anti-poverty campaign group War on Want.
Low tax rate
According to the company’s accounts, between 2009 and 2013, the Luxembourg-based structure, which employs just 13 people, registered a revenue of €3.7 billion, on which it paid a meagre €16 million in tax.
Filings in Luxembourg show that in 2013 alone McD Europe Franchising Sarl, received over $1 billion in fees from franchisees and McDonald’s subsidiaries across Europe.
In addition it paid tax of just 1.4 percent on profits of $288 million in 2013 – well below the headline Luxembourg corporate tax rate of around 29 percent.
“It is shameful to see that a multi-billion Euro company, that pays low wages to its workforce, still seeks to avoid its responsibility to pay its fair share of much needed taxes to finance public services we all rely on. Rather than supersizing profits and minimising taxes, McDonald’s should change its recipes to ensure that Corporate Citizenship is at the core of its menu,” said EPSU General Secretary Jan Willem Goudriaan.
In the UK
In the UK the company is thought to have avoided around £75 million in tax. The company has disclosed that between 2009 and 2013 it paid £294.2 million in franchise rights fees offshore.
The researchers say that if these franchise rights fees were subject to taxation in the UK at the prevailing corporate tax rate, McDonald’s would owe an additional £75.7 million in unpaid taxes over the past five years.
However they go on to say that:
“... the UK has been significantly impacted by the decision of McDonald’s management to relocate the company’s European headquarters to Switzerland in 2009. If McDonald’s had maintained its European headquarters in London and paid UK tax on royalties earned from its European subsidiaries, the royalties that have since been received by McD Europe Franchising Sàrl would have been subject to a much higher rate of tax. If all of the royalties actually received by McD Europe Franchising Sàrl between 2009 and 2013 were taxed in the UK instead, McDonald’s would have owed up to £818.7 million in tax.”
McDonald’s has faced widespread criticism in Europe and globally for the low wages and poor working conditions at its restaurants.
In the UK, for example, workers have protested McDonald’s practice of “zero-hours contracts”, which leaves workers without any guarantee of regular work or stable income.
The company’s low wages have also been criticised for imposing substantial costs on taxpayers, as many McDonald’s workers are forced to rely on public assistance, such as working tax credits, to meet basic living expenses.
The report’s authors are now calling on the European Commission and national tax authorities, as well as the European Parliament’s newly formed Special Committee on Tax Ruling, to look closely into McDonald’s tax practices and take appropriate measures.
McDonald’s European office had no immediate response when asked for comment by Reuters. Previously, the company said it followed tax rules in the different jurisdictions where it operates. Download the full ‘Unhappy meal’ report.