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McDonald’s child labor audit demanded by some shareholder groups [1]

['Lauren Kaori Gurley']

Date: 2023-06-23

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A coalition of McDonald’s shareholder groups is demanding the fast-food giant conduct a third-party human rights assessment, in response to a string of child labor violations found at the company’s U.S. franchises. Get a curated selection of 10 of our best stories in your inbox every weekend. ArrowRight “McDonald’s child labor violations pose an increasing legal and reputational risk to shareholder value,” wrote the signatories, including the Illinois state treasurer and the New York City comptroller, in a letter sent to the board of McDonald’s on Friday.

The request coincides with a steep rise in the number of minors linked to child labor violations in the United States that have been concentrated largely in the restaurant industry, as demand for workers had boomed in the pandemic recovery economy. Young teens have been sacrificing their education, sleep and social lives to work for some of the country’s most recognizable companies that are hard-pressed to find workers.

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The coalition — which includes more than 30 signatories, many of whom oversee public worker pension funds — has asked McDonald’s to release the results of a third-party audit into child labor publicly by the end of 2023.

The audit request from shareholders puts pressure on McDonald’s to take responsibility for the flurry of child labor violations in its U.S. restaurants, where so far only its franchises have been fined.

“These reports are unacceptable, deeply troubling and run afoul of the high expectations we have for the entire McDonald’s brand,” said Tiffanie Boyd, senior vice president of McDonald’s USA. “It is not lost on us the significant responsibility we carry to ensure a positive and safe experience for everyone under the Arches … We are committed to ensuring our franchisees have the resources they need to foster safe workplaces for all employees and maintain compliance with all labor laws.”

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The McDonald’s shareholders, in their letter, cite an analysis of federal data by the Food and Environment Reporting Network, which found that McDonald’s franchises committed nearly 9 percent of all child labor violations between 2018 and 2022.

McDonald’s said that the report is a blatant misrepresentation of the experience of young people who work at its restaurants when accounting for the size of the workforce, which includes more than 800,000 workers.

The coalition is also asking the McDonald’s board of directors to adopt a zero-tolerance policy in its global brand standards for child labor violations in its franchises.

McDonald’s human rights policy and standard of business conduct prohibit child labor violations, but do not require franchises to adhere to that same standard. More than 95 percent of McDonald’s locations in the United States are franchises.

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“A company as well known as McDonald’s should not be engaging in the use of child labor irrelevant of whether it’s a company- or franchise-owned restaurant,” said Tejal Patel, executive director at SOC Investment Group, a shareholder group that oversees union pensions and is spearheading the request. “These incidents really show that the company needs to monitor and enforce its policies on child labor when it comes to its restaurants systemwide.”

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Patel said the coalition’s demands could be incorporated into a shareholder proposal if McDonald’s does not agree to an audit voluntarily.

The recent child labor violations at McDonald’s restaurants include a 15-year-old employee in Tennessee who received hot oil burns while using a deep fryer. The Labor Department also fined one of the franchises in Louisville last month nearly $40,000 for having two 10-year-olds work until 2 a.m., without pay.

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McDonald’s directed The Washington Post to a statement provided by the Tennessee franchise Faris Enterprises that allegedly employed the teenager who suffered burns. The franchise said that it regretted any errors that led to the violations and that their younger employees must now wear a special uniform to distinguish themselves from other employees to aid management in enforcing laws.

McDonald’s also directed The Post to information provided by the Kentucky franchise owner Bauer Food that allegedly employed the 10-year-olds. The two 10-year-olds were children of a manager and received any direction to work from their parent, Bauer Food said.

Other recent violations that Labor Department investigators found at McDonald’s include allowing minors to work more hours during the school year than is legally permitted, and allowing them to work with hazardous equipment.

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Federal labor law prohibits minors under 14 from working. It also prevents minors under 16 from using manually operated deep fryers or working past 7 p.m. on school nights and 9 p.m. during the summer.

The Biden administration announced in February a crackdown on employers who violate child labor laws, even as a handful of states with Republican-controlled legislatures, such as Iowa and Arkansas, have moved to relax child labor laws.

A Florida-based think tank and lobbying group, Foundation for Government Accountability, has drafted state laws that have successfully rolled back child workplace protections this year, The Post reported last month.

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[1] Url: https://www.washingtonpost.com/business/2023/06/23/mcdonalds-child-labor-shareholders/

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