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Understanding the McDonald’s pay increase

If you’ve been paying attention to the news as many California residents do, then you may have heard about the announcement made a few months ago by McDonald’s Corp. As some of our San Diego readers may remember, McDonald’s Corp. announced that it planned on increasing pay by “$1 an hour more than the local minimum wage for employees.” The news was received with considerable praise by many across the nation, including here in California where our high standard of living typically creates problems for low-income fast-food workers.

But as a Wall Street Journal article points out, the decision to increase wages for workers in McDonald’s restaurants will not have as large of an impact as most people believe. That’s because the increase only affects corporate-run restaurants. As most people are unaware, corporate-run restaurants only make up about 10 percent of McDonald’s total stores. To put this into perspective, of the 14,350 McDonald’s locations in the United States, only about 1,500 would be affected by the pay increase.

But why is this the case, you may ask? The reason is because a majority of McDonald’s restaurants, roughly 90 percent to be more accurate, are run by franchise owners. The operation of their stores relies on the terms agreed upon under a franchise agreement. In many cases, the terms of these agreements may not require franchise owners to abide by the corporation’s decision to raise wages, leaving potentially hundreds of thousands of workers wondering whether or not they are getting the compensation they are owed.

Situations such as this don’t just leave workers confused and unsure about their rights, they can be equally confusing to business owners as well. This is why talking to a skilled employment law attorney is never a bad idea, especially when facing complex situations such as the one above.


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