Fast food workers will be allowed to sue McDonald's, which is responsible for the labor violations of its franchisees, the National Labor Relations Board said Tuesday.
NLRB General Counsel Richard Griffin determined that McDonald's should be considered a "joint employer," along with the franchise owners that operate thousands of stores around the country.
Labor groups hailed the decision, saying that McDonald's could no longer shy away from its responsibilities as an employer.
But restaurants say the NLRB's decision could have a devastating impact on not just McDonald's but all companies that operate franchises.
The National Restaurant Association says the ruling "jeopardizes the success of 90 percent of American's restaurants, which are independent operators or franchisees."
While the NLRB's decision makes corporations such as McDonald's liable for the actions of their franchisees, this in turn would also take away the ability of franchise owners to operate independently, critics say.
"If franchisors are joint employers with their franchisees, these thousands of small business owners would lose control of the operations and equity they worked so hard to build," said International Franchise Association President Steve Caldeira.
"Millions of jobs and the livelihoods of thousands of independent franchisee small businesses are now at risk due to the radical and unprecedented nature of this decision," Caldeira added. "Ruling that franchises are joint-employers will be a devastating blow to franchise businesses and the franchise model."
McDonald's has more than 35,000 restaurants around the world, of which about 80 percent are operated by franchise owners.