In a setback for McDonald’s, a federal administrative law judge on Tuesday rejected a proposed settlement between the company and the government’s top labor-law prosecutor in a case that could threaten the viability of the franchise business model.
In the trial, which had begun under the Obama administration in 2015, the government contended that McDonald’s was liable for numerous labor-law violations committed by its franchisees. A finding for the government could have exposed companies that rely heavily on the franchise model to enormous liability.
But in January, the new general counsel of the National Labor Relations Board, an appointee of President Trump, was granted a 60-day stay in the case to negotiate a settlement with the company, even though the trial was only days from concluding.
The general counsel, Peter B. Robb, and the company then presented a proposed settlement to the judge in March.
