TIME Retail

Inside Starbucks’ Radical New Plan for Luxury Lattes

An employee pours milk into a cardboard coffee cup inside a Starbucks Corp. coffee shop in London on June 9, 2014.
An employee pours milk into a cardboard coffee cup inside a Starbucks Corp. coffee shop in London on June 9, 2014. Bloomberg/Getty Images

Your Starbucks is about to change radically—get ready for $6 coffee

If there is a retail proxy for America, it must be Starbucks. The company has 12,000 stores in the US, doing 47 million transactions per week, serving 70 million unique customers. One in eight people found a Starbucks card in their Christmas stocking last year. So when Starbucks founder and CEO Howard Schultz says something about consumers, people tend to listen. (Indeed, everyone from President Obama to the heads of major investment banks have been known to ring him for a cup by cup read on the state of the economy.)

At the company’s biannual investor conference this week, Schultz gave his take on the state of the recovery in the US. While Schultz is bullish, laying out some robust growth targets for his company, he also said, “We are living at a time when the world is very fragile, and that effects consumer confidence.” Just like the overall economy, Starbucks is bifurcated—stores in some affluent cities are doing more business than ever, while others have yet to spring back from the last several years of crisis and recession.

What’s more, the way people are shopping is changing profoundly. According to Schultz, the “seismic shift” in consumer spending from bricks and mortar retail outlets to online shopping that the company first noted last year has become “a tidal wave.” That’s going to change the entire nature of retail and public spaces. As Schultz put it, “I wouldn’t want to be a mall operator five to ten years from today,” referencing the fact that foot traffic in malls and in Main Street shopping areas throughout the country is way down from last year.

The problem is, that’s where most Starbucks today are located. Solution: a whole new approach to stores that mirrors this new economy. Just as fashion brands have “haute” couture and mass market lines, Starbucks will now have luxury “reserve” stores, and many more express kiosks, mobile coffee trucks and all kinds of specialized retail outlets purpose built for specific spaces. Think luxe roadside coffee pit-stops, or “hammerhead” shaped drive through outlets made out of used cargo containers that will sit in the entrance to highways or on small silvers of land near a bowling alley or another local attraction.

The idea will be to make Starbucks a destination in and of itself, one that’s not so dependent on foot traffic. “People are still longing for connection, and a sense of community, perhaps more so now that they are spending more time at their computers, or working from home,” says Schultz. But in order to preserve the “third place,” Schultz says the company will increasingly have to offer “experience, rather than just a product.”

On Dec. 5, Schultz debuted part of the new strategy—his first flagship “Roastery,” a 15,000 square foot space in Capitol Hill, Seattle that is both a coffee roasting facility, and a consumer retail outlet. The place is to coffee what FAO Schwartz is to toys or Dover Street Market is to fashion—retail theatre. You can watch beans being roasted, talk to master grinders, have your drink brewed in front of you in multiple ways, lounge in a coffee library, order a selection of gourmet brews and locally prepared foods. (The entire store is crafted from Made in America materials, by regional artisans.) The architecture says “niche” not mass, as does the merchandise—copies of the New Yorker are scattered alongside top of the line espresso machines and bags of reserve beans marked with their crop year.

Schultz calls it his “Willy Wonka factory of coffee,” and it speaks to the fact that in retail, as in nearly every aspect of the economy these days, there seems to be two directions—up, or down. At the Roastery, a latte made from beans cut and roasted in front of you only minutes before can cost more than $6 bucks. And the truth is that they could probably charge a lot more. There’s little price sensitivity for the upscale consumer these stores—and the smaller “Reserve” stores inspired by the flagship, which will be coming to a town near you in 2015—will target.

In America these days, there are two kinds of people: those that can buy lattes, and those who make them. Schultz is endeavoring to change both their lives.

Read next: How to Win Free Starbucks for Life

TIME Labor

Convenience Store Employees Join Fast Food Workers in New Strikes

McDonald's Workers, Activists Protest McDonald's Labor Practices
Women hold banners during a protest for higher wages for fast food workers on March 18, 2014 in New York City. Andrew Burton--Getty Images

Protests expected to reach 190 cities

Fast food workers’ campaign for better pay continues to spread.

Workers in hundreds of cities once again walked off the job Thursday, organizing protests advocating for a $15 per hour living wage and the right to unionize.

Fast food workers have gone on similar strikes several times in the past two years, but this time they were joined by convenience store workers from retailers like Big Lots and Dollar Tree in some cities. Organizers said strikes and protests hit 190 cities in total.

The strikes, backed by the Service Employees International Union, began two years ago at a few fast food restaurants in New York and have been growing ever since. So far, fast-food chains themselves haven’t given higher wages to workers in any widespread manner, instead maintaining that they offer competitive pay and benefits.

But the political effect of the strikes seems to be growing. President Barack Obama has acknowledged fast food workers’ plight in his campaign to push the federal minimum wage to $10.10, and dozens of cities and states have boosted their minimum wages. Two cities, Seattle and San Francisco, have even pledged to raise their minimum wages all the way to $15.

TIME France

France Considers Scrapping Its 35-Hour Working Week

The French 35-hour working week might be under threat in light of the country's economic woes

France has long had the reputation of taking a lax approach to working life. But now, the New York Times reports that the country is reconsidering the official 35-hour working week amid reports that the policy is abused by employers and creating financial hardships for employees.

The shorter working week was implemented in 2000 by the then-Socialist government as a way to stimulate job creation. But according to the Organization for Economic Cooperation and Development, French employees work an average of 39.5 hours per week, just shy of the eurozone average of 40.9 hours per week. According to the Times, the shorter working week hasn’t kept unemployment down — which is at 10.2 percent in France — and might even have led to the rise in part-time contracts, which employers increasingly use to avoid having to pay full-time staff overtime.

[NYT]

TIME work

Why You Should Embrace Late-Night Work Email

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Luis Alvarez—Getty Images

Why being constantly “on” at work is as liberating as it is confining

Eight hours to work. Eight hours to play. Eight hours to sleep.

In the early 19th century, Welsh reformer Robert Owen declared this as the ideal division of a 24-hour day and we workers of the world have been fighting for it ever since.

But in our ever more connected lives the old barriers between work and personal life are increasingly fuzzy. The smartphones in our pockets ding and buzz with messages from our workplaces late into the night, making the notion of eight hours of uninterrupted recreation seem very quaint indeed. Smartphone-dependent professionals are justifiably worried about where this road leads. In Germany, policymakers are toying with the idea of an outright ban on contacting employees after the official workday is over.

Never fear, humanity. The smartphone will set you free. Here’s why.

(MORE: 9 Rules For Emailing From Google Exec Eric Schmidt)

Robert Owen, and other labor activists who fought and died for the right to leave work at a reasonable hour, were responding to a world rapidly changing from one of independent contractors (farmers, artisans, etc.) to one of wage-earning employees. You went to work at a factory or an office where you worked under the watchful eye of a floor boss or a manager. You sold your labor away in large blocks of time during which you were not, for all intents and purposes, free. Today, we’re headed in a different, and altogether better, direction.

The workplace today is becoming increasingly flexible, which is to say that workers today, in the developed world, are increasingly free. You see it in the rise of telecommuting and of the flexible workday. Today, 34% of the U.S. workforce are freelancers, according to a recent survey from the Freelancer’s Union. We’re heading in the direction of a labor force that is increasingly free to move freely and to divide up their time in a way prioritizes their own goals and schedules, to run a midday errand or spend time at home with the family even on a late work night. The smartphone and the era of constant connectivity is what makes that freer world possible.

(MORE: Germans Say “Nein!” to Late-Night Work Email. Here’s How You Can, Too)

That’s a good thing and most workers in the U.S. agree. In a Gallup poll earlier this year, 79% of workers said having the ability to connect with work remotely using a computer or a smartphone or the like was a positive development.

As in an earlier era that needed new laws to protect the rights of factory workers, it may be that today’s changing workplace demands new laws of its own. Today’s always-on workplace can morph into a monster if unchecked and freer workers will need to be willing to say no sometimes and just turn off the phone. As in all things, with freedom comes responsibility — and that includes responsibly maintaining your all important email account. The difference is that today’s freer workers are freer to do that than in eras past.

Robert Owen’s prescription for the good life, eight-hours for work, play and sleep, still seems a useful framework. The only thing really different today is that we’re freer to divide up those eight hour blocks than before.

(MORE: Here’s a Radical Way to End Vacation Email Overload)

TIME Qatar

2 British Human Rights Workers Go Missing in Qatar

Ghimire Gundev, Krishna Upadhyaya
This undated combination photos released by the Global Network for Rights and Development (GNRD) shows GNRD employees, Ghimire Gundev, a photographer from London, left, and his colleague Krishna Upadhyaya, a researcher, both at unknown locations. AP

The Gulf state is slated to host the World Cup in 2022

Two British human rights workers went missing while researching the mistreatment of migrant workers in Qatar, colleagues of the missing workers said Friday.

Krishna Upadhyaya, 52, and Ghimire Gundev, 36, had been in Qatar since Aug. 27 working on a report for the Norwegian-based Global Network for Rights and Development (GNRD) before “vanishing” five days ago, according to the organization. On Friday afternoon, a small group of human rights advocates delivered an angry letter to the ambassador of Qatar in the United Kingdom demanding “that the government of Qatar discloses what it is doing to find the two workers and ensure their safety.”

Neither the U.S. State Department nor the British Foreign Office have released any information about the situation. The Gulf state is slated to host the World Cup in 2022.

The sudden disappearance of the two men underscores growing tensions in the small, gas-rich nation, the wealthiest in the world per capita, which has drawn withering criticism in recent months for its treatment of roughly 1.5 million foreign workers, many of whom are employed in construction projects related to the World Cup.

International human rights groups and newspaper investigations have accused Qatar of fostering “slave-like” conditions, stripping visiting workers of basic rights, and allowing companies to pay them as little as 85 cents a day. Other reports indicate that workers live in cramped, unsanitary and unsafe conditions, and are forced to labor without basic protections, like adequate water and shade, in sweltering and dangerous environments.

Critics have also pointed at Qatar’s flawed immigration system, which makes it possible for employers to effectively hold migrants workers ransom by refusing to allow them to obtain exit visas. That issue rocketed into headlines last fall after professional soccer player Zahir Belounis said he was “stranded” in the country and appealed for international help to return to his home in France.

According to the Qatari government, roughly 1,000 foreign workers died in Qatar in 2012 and 2013, but human rights groups say that number is low. An ESPN investigation estimated that, even by conservative estimates, at least 4,000 migrant workers will die while working in Qatar by the opening ceremony of the World Cup.

In a large part due to such international attention, the Qatari government announced in May that it would take steps to better protect migrant workers’ rights, but human rights activists say they have yet to see any significant improvements. Sepp Blatter, the president of football’s world governing body, FIFA, has said that migrant workers’ conditions in Qatar are “unacceptable,” but has stopped short of calling to move the 2022 tournament.

The debate over migrant workers’ rights comes just months after FIFA launched an investigation into allegations that a Qatari official paid more than $5 million to secure his country’s successful bid to host the tournament. Dozens of advocates have since called for a new vote on which country should host the 2022 event.

GNRD said it suspects that Upadhyaya and Gundev, who are of Nepali heritage, were detained—the letter delivered Friday to the ambassador points the finger at Qatari police—but Qatari authorities have said nothing about the men’s whereabouts.

Upadhyaya, a researcher, and Gundev, a photographer, sent text messages to colleagues Sunday saying that they believed they were under surveillance and being followed by plain clothes police officers. They were filming interviews with migrant workers before they went missing.

Qatar, which is about the size of Connecticut and has fewer citizens than Cincinnati, has been at the center of mounting tensions in the Middle East. Its vociferous support for the Muslim Brotherhood has put it at odds with its neighbors in the Gulf and led Saudi Arabia, Bahrain, and the United Arab Emirates to withdrew their ambassadors from Doha this year in protest.

TIME Fast Food

Fast Food Workers Plan Another Strike in 150 Cities

Workers are planning another set of one-day walkouts on Thursday

Fast food workers around the country are planning another set of one-day walkouts this Thursday, according to Fast Food Forward, an organizing group for the protests. The strikes will take place in 150 cities at restaurants such as McDonald’s, Wendy’s and KFC. Fast-food workers have spent almost two years using such walkouts as part of an ongoing campaign to demand pay of $15 an hour—what they call a living wage—and the right to unionize. The average hourly wage for restaurant workers was $8.74 as of May 2013, according to the Bureau of Labor Statistics.

The efforts began with 200 fast-food workers in New York City in November 2012 and have since become a regular occurrence across the country every three or four months. In their attempts to reach their stated goals, the workers’ efforts have so far yielded modest results. In May Daisha Mims, a McDonadl’s employee who has participated in walkouts, told TIME she’d received 35 cents in raises since the strikes began. “I still feel as though I need a second job,” she said at the time. Organizers pointed to similarly sized gains for a small number of individuals across the country.

But there have been larger shifts in the labor landscape that seem clearly influenced by the fast food workers’ actions. Thirteen states increased their minimum wages at the start of the year by an average of 28¢, according to the National Employment Law Project, and the city of Seattle has approved a $15 minimum wage. More recently, the National Labor Relations Board ruled in July that McDonald’s is jointly responsible for wage and labor violations that are enacted by its franchise owners. Previously, McDonald’s and other fast food corporations have argued that franchisees are solely responsible for determining the wages and working conditions for their restaurants. McDonald’s has said it will appeal the decision.

The strikes are largely being funded by the Service Employees International Union with a media strategy devised by the PR firm Berlin Rosen.

TIME Civil Rights

Here’s Why We Celebrate Labor Day

Labor Day Parade in New York, in 1995.
Labor Day Parade in New York, in 1995. Susan Watts—NY Daily News Archive/Getty Images

Here's what you need to know about one of America's most important holidays.

The first Monday of September means that white clothes are out, sales are in, summer holidays are over and classes begin. For many of us (but far from all of us), it’s a welcome day off of work or school, ahead of what is likely to be a busier month than the last.

But the Labor Day holiday has a storied past, one of violence and celebration, that’s embedded deep in the history of the American labor movement. And while it has spread around the world in different forms, Labor Day has distinctly American roots.

Here’s a quick primer on the meaning and history of the holiday.

When did Labor Day begin?

The modern holiday is widely traced back to an organized parade in New York City in 1882. Union leaders had called for what they had labelled a “monster labor festival” on Tuesday, Sept. 5, according to Linda Stinson, a former historian for the Department of Labor (the idea for a general labor festival may have originated in Canada, which today also celebrates “Labour Day” on the first Monday in September). Initially that morning, few people showed up, and organizers worried that workers had been reluctant to surrender a day’s pay to join the rally. But soon the crowds began flowing in from across the city, and by the end of the day some 10,000 people had marched in the parade and joined festivities afterward in what the press dubbed “a day of the people.”

When did it become an official holiday?

The practice of holding annual festivities to celebrate workers spread across the country, but Labor Day didn’t become a national holiday for more than a decade. Oregon became the first state to declare it a holiday in 1887, and states like New York, Massachusetts and Colorado soon followed suit. Under President Grover Cleveland, and amid growing awareness of the labor movement, the first Monday in September became a national holiday in 1896.

Why is it on the first Monday in September anyway?

Labor union leaders had pushed for a September date for the New York demonstration, which coincided with a conference in the city of the Knights of Labor, one of the largest and most influential of the unions. The first two New York City Labor Days took place on the 5th of September, but in 1884, the third annual New York City Labor Day holiday was scheduled for the first Monday in September, and that date stuck.

The September rally would soon clash with International Worker’s Day on May 1, which arose out of what is known as the Haymarket Affair. On May 4, 1886, protesters in Chicago gathered to demand an 8-hour workday. Toward the end of the day, a peaceful demonstration devolved into violence when a bomb was hurled toward the police, killing one officer instantly and injuring others. The police responded by firing into the crowd, killing a still undetermined number of people. The incident enraged labor activists but also fueled fears in America that the labor movement had become radicalized, prompting a crackdown on labors groups: the bomb thrower was never identified, but four people were hanged for their alleged involvement.

In the wake of the Haymarket Affair, Union leaders and socialists declared May 1 as International Workers’ Day, and the day was and continues to be unofficially observed in the U.S. It’s also that date that most other countries officially or unofficially observe as a holiday in honor of workers. But when President Grover Cleveland moved to create a national labor holiday, he chose to avoid the thorny history of that May date.

So what’s the difference between Labor Day and May Day (International Workers’ Day) in the U.S.?

Jonathan Cutler, associate professor of sociology at Wesleyan, described Labor Day as a “government alternative” to May Day in an informative interview with NPR about the Haymarket Affair. May Day may have helped promote the creation of a national holiday, but Labor Day is associated with a different significance. “May Day has always been linked to the demand for less work and more pay; Labor Day celebrates the ‘dignity’ of work,” Cutler said in the interview.

We have Monday off, but does the labor community still actually celebrate the holiday?

Yep. To this day there is still a major parade in New York City (and other cities across the country, large and small), and the #UnionStrong will probably make a big showing on Twitter. It’s true that union membership has been declining for years, but many of the challenges that faced workers more than a century ago are still being overcome today, whether by the growing movement for higher wages in the fast food industry or by overworked tech and finance employees calling for better hours.

“If there is anyone who needs to attend to the spirit of Haymarket, it is the American white-collar professional who works 10 hour days, including many weekends, and who has fewer paid vacation days than other white-collar professionals around the world,” Cutler said in the interview with NPR.

So, are white clothes really out?

Yes and no.

MONEY Workplace

What Labor’s Win at Market Basket Means for Your Job Security

140829_RET_Market_1
Elise Amendola/AP

The victory at a New England grocery chain might seem like a fluke. But economic trends show that workers may be finally getting some leverage.

You don’t often hear about it, but every day, in countless workplaces, people make difficult choices to do the right thing by standing up for co-workers—often at great risk to their careers. These workers are the true heroes of this and any other Labor Day. Which is why what happened recently at Market Basket is so unusual: labor won a major victory, and it got a lot of press.

For those who don’t live in the Northeast, Market Basket is a family-owned New England grocery chain. A bitter family feud led to the ouster of the revered CEO, Arthur T. Demoulas. Market Basket’s workers backed his reinstatement with protests and rallies, which ratcheted up after the company threatened to fire some of them. Public opinion was heavily in the workers’ favor. Today the majority owners of the company announced their decision to sell their shares to Demoulas, who not only gets his job back but control of the company to boot.

It’s not everyday that you see relatively low-paid supermarket workers demonstrating on behalf of their CEO. But what’s really unusual here is the display of an all-too-rare commodity in an American workplace: trust between workers and management.

The Great Recession should have been dramatic evidence to those who manage and staff the nation’s workplaces that we’re all in this together. But, of course, it wasn’t. Employers cut payrolls and benefits—remember defined benefit pensions?—some of which perhaps was unavoidable. They also outsourced jobs and even entire operations to lower-cost markets, creating armies of freelancers who work without full salaries or even a 401(k) plan. Yet many companies, if not most, continued to provide upper-management lavish pay packages and perks that further distanced them from the people whose labor was essential to their long-term success.

Some people feel workers will never recover the ground they’ve lost. But there are encouraging signs that labor may be gaining some leverage.

Like an economist who has correctly predicted nine of the past two recessions, I have repeatedly stressed that the U.S. economy is running out of workers. Even though many Baby Boomers are continuing to work past traditional retirement age, the numbers of boomers who have retired exceeds the flow of new entrants into the labor force.

Up till now labor shortages were masked by steep employment declines during the recession. But the recovery has slowly reduced unemployment. The Congressional Budget Office just forecast improved economic growth rates over the next few years. And the Wall Street Journal, among others, recently reported that shortages of unskilled labor are forcing up wage rates in some parts of the economy. And other indicators show that the job picture is brightening for those looking for work.

No question, this recovery remains very disappointing. We haven’t recovered enough lost jobs. Real wage gains remain elusive. There are few if any signs that the economic gap between rich and poor is narrowing. But even abysmal growth will, over time, lead to spot labor shortages. And with immigration reform stalled, boosting the nation’s labor supply with more newcomers is not going to happen anytime soon, which will give workers more bargaining power.

Employers may already be responding. Gallup reports that 58% of workers—both full- and part-time—are “completely satisfied” with their job security. That’s a new high, which exceeds levels just before the recession and even the levels during the dot-com euphoria of the late ’90s. Gallup also found that 71% of workers were completely satisfied with their relations with co-workers, 63% with the flexibility of their working hours, and even 60% with their boss or immediate supervisor.

Confident employees are more likely to push back against their bosses and to seek other jobs if current employers fail to meet their needs. If today’s attitudes do translate into more employee assertiveness, we can expect to see not only higher wages and improved retirement benefits, but also increased demands for restructuring jobs and job responsibilities. This would mean jobs with more flexibility, jobs that use technology to allow teams to work together from different locales, and jobs that measure outputs and judge workers on results, not the number of hours they worked or time spent at meetings in the office.

Achieving such results will stretch both managers and employees. And it will require major efforts to rebuild trust. For now, I will just wish you a happy Labor Day, with a special shout-out to the folks at Market Basket.

Philip Moeller is an expert on retirement, aging, and health. He is an award-winning business journalist and a research fellow at the Sloan Center on Aging & Work at Boston College. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

TIME Workplace & Careers

Yes, There Is Diversity in Silicon Valley — if You Know Where to Look

Google Celebrates 15th Anniversary As Company Reaches $290 Billion Market Value
Pedestrians walk past Google Inc. signage displayed in front of the company's headquarters in Mountain View, California, U.S., on Friday, Sept. 27, 2013. David Paul Morris—Bloomberg / Getty Images

Study finds many black and Latino workers toil in the tech scene's "invisible" workforce of cooks, cleaners and guards

A new report on the diversity of Silicon Valley’s workforce has found a preponderance of black and Latino workers relegated to the bottom rungs of the pay ladder.

Working Partnerships USA released a report on Tuesday that drew attention to an “invisible” legion of contracted workers who cook, clean and guard corporate campuses throughout the Valley.

While black and Latino workers comprise less than 5% of the workforce at prominent companies such as Twitter, Facebook, eBay and Google, their representation balloons to 41% among security guards and 75% among groundskeepers, according to employment data released by the companies and Santa Clara county.

Members of this contracted workforce make an average hourly wage of $11 to $14 an hour, or less than a fifth of the average software developer, the study found.

“These ‘invisible’ workers do not share in the success of the industry which they daily labor to keep running,” the study’s authors wrote. “As contracted workers, their employer of record is not Google or Apple, but a middleman, making them ineligible for most of the benefits and amenities offered on the campuses where they work.”

A growing number of tech companies have voluntarily released employment statistics as part of an effort to address gaps in diversity. “As CEO, I’m not satisfied with the numbers on this page,” Apple CEO Tim Cook wrote in a statement accompanying Apple’s release. ‘We’ve been working hard for quite some time to improve them.”

TIME Labor

Franchisors Fear Labor’s Big Mac Win

Fast Food Workers Across U.S. Rally For Increased Wages, Unionization
Fast food workers and activists demonstrate outside McDonald's downtown flagship restaurant on May 15, 2014 in Chicago, Illinois. Scott Olson—Getty Images

Lawyers on both sides are digging in for a big battle

One of the strategies that has made McDonald’s a global fast food power over the decades is the corporation’s rigorous enforcement of standards. McDonald’s dictates everything from signage, to staffing levels, to food quality, to the temperature of the coffee. There’s no way franchisees can have it their way, as one competitor may have put it.

That enforced consistency, so critical to McDonald’s success, has been turned against the company by the National Labor Relations Board, whose general counsel ruled Tuesday that because McDonald’s pulls most of the strings, it has to be considered a co-employer of franchise workers. That decision came despite the company’s stance that franchisees are the employers and thus McDonald’s shouldn’t be held accountable for their actions.

The NLRB’s ruling applies to 181 cases filed since November 2012 by workers who said their rights were violated—e.g., they were fired—for participating in protests over wages. The NLRB tossed 68 of the cases, while 64 others are pending investigation. But the agency found 43 cases to have merit. More than 90% of the McDonald’s 14,000 restaurants are owned by franchisees, according to the company.

The ruling was a victory for organized labor-backed groups, such as Fast Food Forward, as well as other activists who have been running a national campaign to raise fast food wages to $15 an hour. The ruling means that if the NLRB board accepts any of these cases, McDonald’s, and not just its franchisees, will be hauled before an administrative law judge if the cases aren’t resolved through negotiation.

More importantly, the ruling’s broader legal reach has the restaurant and hospitality industries in an uproar — the decision has sent legal experts on the left and right to their perspective corners to gird for a fight that’s expected to eventually reach the Supreme Court.

“This decision to allow unfair labor practice complaints to allege that McDonald’s is a joint employer with its franchisees is wrong,” said Heather Smedstad, senior vice president of human resources at McDonald’s USA, in a statement. “McDonald’s will contest this allegation in the appropriate forum. McDonald’s also believes that this decision changes the rules for thousands of small businesses, and goes against decades of established law regarding the franchise model in the United States.

The ruling is an attempt to resolve a sticky point in labor law about who qualifies as an employer. It’s generally viewed that if a company outsources its work to another firm, that firm becomes the employer, says Richard Hurd, professor of industrial and labor Relations at Cornell University. That can lead to situations where contract employees work side by side with employees of the parent company.

“Unions have been trying to make the case for quite some time that it’s not that straightforward,” Hurd says.

According to Mark Barenberg, professor of labor law at Columbia University, in a quote supplied by Fast Food Forward, the ruling “has the potential to upend the fast-food industry’s decades-long strategy of ‘out-sourcing’ legal responsibility to franchisees when it comes to securing workers’ rights.”

What’s really got the franchising industry worried, though, is that the ruling will open a Pandora’s Box of liability exposure. If brand owners are deemed joint employers in a broader context, it will make them litigation targets for issues such as wages and hours, slips and falls, and sexual harassment, says David Sherwyn, professor of hospitality human resources at the Cornell University School of Hotel Administration. The potential liability is enormous, because litigators always sue the deepest pockets. Franchising companies in the food and hotel industries have spent years figuring out what constitutes control and what doesn’t to give themselves a legal distance from their owners: they can tell franchisees how they must decorate their hotels, for instance, but they won’t dictate employment practices.

“Franchise lawyers have figured out where the line is, and the line is all about control,” says Sherwyn. “Let’s call it the 40 yard line. The lawyers are living on the 38 yard line and I think the [NLRB] general counsel thinks they should be living on the 32.”

The industry wants McDonald’s to hold that line.

Even if the ruling stands up to legal challenges, however, don’t expect it to set off a big organizing campaign by labor unions in the fast food industry, says Hurd.

“This is not a huge step; it doesn’t say the unions can run an organizing campaign against McDonald’s nationally,” Hurd says. “The logistics would be impossible.”

That’s because labor would still have to organize store by store or franchise across a big enough swath of units. But it could allow a union such as the Service Employees International Union (SEIU) the leverage to discuss broad terms of, say, wage and hours policy that a franchisor, whether it’s McDonald’s or La Quinta Inns, could impose on its franchisees. And barring that, it provides the SEIU, which backs Fast Food Forward, its own forward momentum to continue to press for wage increases knowing that the giant McDonald’s Corp., and not just its diverse franchisees, now has a dog in this hunt.

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