McDonald’s discrimination lawsuit seeks to stop chain expanding in Brazil

Major lawsuit brought by nine labour organisations alleges that McDonald’s and its franchisee have engaged in systematic violations over three decades

A major lawsuit filed against McDonald’s in Brazil is seeking to stop the fast food chain from opening any further stores in the country until it amends its working practices.

Nine labour organisations, including Brazil’s three largest trade unions, allege that McDonald’s and its franchisee, Arcos Dourados (Golden Arches), have engaged in “social dumping” – their term for widespread and systematic labour violations over the past three decades.

Among the claims in the suit, filed at an industrial tribunal in Brasília, Arcos Dourados stands accused of paying less than the minimum wage, employing underage staff and failing to pay overtime. It also alleges staff were exposed to unsanitary working conditions and obliged to work variable shift patterns, which is prohibited by local labour laws.

“McDonald’s turns a blind eye to Brazilian laws to ensure greater business profit, gaining an unfair advantage for itself over companies that respect the rule of the law,” Moacyr Roberto Tesch Auersvald, president of Contratuh, a tourism and hospitality workers’ union, said in a press conference in São Paulo on Tuesday.

“Unless the company immediately proves that it respects our laws and our workers, it should not be allowed to open up new stores in Brazil,” he said. The plaintiffs are also seeking workers’ compensation. Under Brazilian law, the value of the damages could be up to 30% of the company’s revenues in Brazil.

Arcos Dourados is the largest McDonald’s franchisee in Latin America. Sales in Brazil are responsible for nearly half of McDonald’s total revenues in Latin America. With 42,000 workers in 850 restaurants across the country, the company is also one of Brazil’s biggest employers.

Monica Caroline, 19, was contracted to work at a branch of McDonald’s in a shopping centre in São Paulo under an apprenticeship scheme when she was 14. Part of her job consisted of cleaning meat-mincing machines and lifting heavy weights, activities legally prohibited for under-18s. She was also supposed to earn around R$3.60 ($1.26 per hour), but she said that she never received anything close to the amount she had earned.

In a statement, McDonald’s said that it has not been officially notified of the lawsuit: “However, the company reiterates its conviction that its working practices fulfil all rules and legislations in the areas in which it operates. All of the company’s employees are registered in accordance with legislation and receive remuneration and benefits in line with the collective agreements signed with the country’s respective unions.”“It was my first job and I was really excited about the opportunity, but the experience was terrible,” she said. “I hold McDonald’s responsible. None of the other apprentices I knew were treated as badly.”

McDonald’s has been cited in almost 400 lawsuits in Brazil over the past few years. In 2013, a court in the north-eastern city of Recife fined Arcos Dourados R$7.5m (£1.7m) for obliging staff to work a variable shift pattern and to eat only McDonald’s food during their meal times.

Subsequently the company signed a national agreement with the labour ministry, committing itself to abide by Brazilian work laws. Leonardo Mendonça, the labour ministry’s chief negotiator in the 2013 deal, said he had received a lot of complaints about the working practices at McDonald’s.

“Arcos Dourados wanted to implement the same working patterns that McDonald’s uses in the US or the UK,” he said. “But that is not permitted under Brazilian law. Workers also have families and they should not always have to be at the dispensation of their companies.”

The Washington-based Service Employees International Union (SEIU) is also backing the lawsuit. Jessica Davis, a 26-year-old McDonald’s employee from the US who earns $9.28 an hour, addressed Tuesday’s press conference in São Paulo via video link.

“It’s hard to earn a living and feed two kids with this pay,” she said. “We need to expose the poor behind the golden logo of a company which is the second-biggest employer in the world.”

In the US, unions are pushing for higher wages and benefits for workers in the fast-food and retail sectors. McDonald’s is under increased pressure to raise wages following the decision by Walmart to increase its minimum pay to $9 an hour.

In December 2014, McDonald’s posted its worst monthly US sales decline in more than a decade. Global sales have been in decline since July.