NEW YORK – An administrative law judge rejected a proposed settlement that would have helped McDonald’s Corp. avoid liability for labor and wage violations committed by franchisees and subcontractors. In her written opinion Lauren Esposito, an administrative law judge with the National Labor Relations Board (NLRB), said “…certain fundamental elements of any effective settlement are lacking in this case.”

Oakbrook, Illinois-based McDonald’s and the office of NLRB General Counsel Peter Robb presented the settlement to Esposito in March. The NLRB classified McDonald’s as joint employer following an investigation into charges that McDonald’s and the chain’s franchisees had violated the rights of employees during pro-labor rallies for higher wages for fast-food workers. McDonald’s challenged the ruling.

In 2015, McDonald’s and the NLRB went to trial, but Esposito agreed to delay proceedings so that the General Counsel’s office could negotiate a settlement with the company. McDonald’s agreed to pay $20 to $50,000 to workers who said they were illegally fired, punished or threatened for participating in the protests for higher wages.

Esposito wrote in her opinion that conflicting statements made by the General Counsel and McDonald’s as to the company’s obligations under the settlement cast “…significant doubt as to whether they have actually reached agreement.”

“A meaningful settlement also requires finality, or a measure of certainty that the settlement will conclusively end the litigation,” court documents state. “Here, the proposed informal settlements’ unusual and complicated form and enforcement mechanisms, coupled with the parties’ evident confusion and history of antagonism, virtually guarantee that the settlements will not definitively end the case.”

Esposito added that NLRB case law requires that a settlement be reasonable, but the proposed settlement was not a “…reasonable resolution based on the nature and scope of the violations alleged…”

“General Counsel’s proffered justifications for the proposed informal settlements’ significant shortcomings are inadequate and inconsistent with Board policy and practice,” Esposito wrote. “As a result, the Motions to approve the Settlement Agreements in this case are denied.”