Thousands of Workers Getting McRaise Starting July 1

The wage and benefit increases recently announced by McDonald’s® put the fast-food giant on the same path retail giant Walmart took back in February when it announced an increase in its starting wage.

Beginning July 1, McDonald’s will raise starting pay at company-owned restaurants to $1 over the locally mandated minimum wage. Full- and part-time workers at company-owned restaurants who have at least 1 year of service will also begin accruing paid time off. And workers at both company-owned and franchised restaurants will see expanded educational opportunities.

The company says the wage and time-off benefits will affect more than 90,000 workers at about 10 percent of McDonald’s restaurants nationwide.

The company’s announcement refers to its franchised outlets as “independently owned,” and it makes clear that pay and benefit decisions of those restaurants are left up to the owners.

The distinction between company-owned and franchised restaurants is likely significant, according to Brian J. Kurtz, an attorney with FordHarrison LLP in Chicago and an editor of Illinois Employment Law Letter.

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In December 2014, the National Labor Relations Board (NLRB) named McDonald’s a “joint employer” of workers at its franchised restaurants, a position the company strongly disputes. As a joint employer with its franchisees, the company would share liability for violations of the National Labor Relations Act (NLRA).

“I think the company wants to be very clear that this wage adjustment applies only to its corporate-owned stores and that it is not requiring, suggesting, directing, etc., its franchisees to follow suit,” Kurtz says.

“We’ve been working on a comprehensive benefits package for our employees—the people who bring our brand to life for customers every day in our U.S. restaurants,” McDonald’s President and CEO Steve Easterbrook said of the company’s actions.

“We’ve listened to our employees and learned that—in addition to increased wages—
paid personal leave and financial assistance for completing their education would make a real difference in their careers and lives.”

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By the end of 2016, McDonald’s projects that the average hourly wage rate for employees at company-owned restaurants will be in excess of $10. The company’s announcement pointed out that more than 3,100 McDonald’s franchisees make their own decisions on pay and benefits.

The McDonald’s news follows a wage-increase announcement by Walmart on February 19 that it would raise hourly pay for 500,000 workers to at least $9 an hour in April. By February 2016, current associates will earn at least $10 an hour, according to a statement from Walmart CEO Doug McMillon.

Mary Kay Henry, president of the Service Employees International Union (SEIU), credited her union and others involved in the fight to raise wages for influencing the Walmart and McDonald’s actions. But she also said the changes aren’t enough.

“Today, workers proved that by joining together, they can improve their lives,” Henry said. “Fast-food workers—joined by adjunct professors as well as Wal-Mart, home care and child care workers and airport staff—raised their voices and have built a movement. Workers got into this fight to improve their lives—not for wage announcements.”

Tomorrow, we’ll look at some of the factors you should consider when calculating employee pay increases, plus an introduction to the interactive webinar, Assembling a Pay Grade System: The Step-by-Step Process for Getting It Right.