McDonald's Accused of Illegal Labor, Tax Practices in Brazil

McDonald's Accused of Illegal Labor, Tax Practices in Brazil
Image credit: Mike Mozart | Flickr

McDonald's Corp, the world's biggest fast-food chain, was accused of mistreating its employees and dodging taxes on Thursday during a Senate hearing in Brazil, where politicians, union leaders and workers from five continents voiced allegations.

McDonald's has come under increasing scrutiny worldwide for allegations of labor abuses, health and safety violations, plus tax evasion in Europe, and Brazilian Senator Pablo Paim called a hearing to allow both sides to make their cases.

McDonald's deferred comment to its regional operator.

Arcos Dorados Holdings Inc, the world's largest McDonald's franchisee and its main operator in Latin America, where it employs 95,000 people and had sales of $3.7 billion last year, was invited to attend the hearing but chose not to, a company spokesman said.

"We are absolutely convinced that the company has complied with labor laws ever since it opened its first restaurant in Brazil 36 years ago," Arcos Dorados said in a statement. It said the company was proud to be the top first-job employer for young Brazilians.

Union representatives told the hearing that McDonald's franchisees in Brazil have denied workers’ pay for extra time worked, not allowed them to join unions and employed teenagers in their kitchens without protective gear, causing some to suffer burns from frying grease and grills.

"Instead of feeding society with good jobs and paying its fair share of taxes, McDonald's feeds on communities, forcing people into dead-end jobs and avoiding taxes," Scott Courtney of the U.S.-based Service Employees International Union said.

The 1.9 million-member SEIU, which has backed the "Fight for $15" (hourly wage) campaign in the American fast food industry since a New York walkout in 2012, said the hearing was a chance to draw wider attention to McDonald's labor policies.

"McDonald's is a global player, and people all over the world should know it is an unfair player that should face global pressure to pay its taxes and decent wages," said Jutta Steinruck, a member of the European Parliament.

She said McDonald's is being investigated in Europe for allegedly evading payment of 1 billion euros in taxes.

One of Brazil's largest labor federations, the UGT, filed a complaint last Friday, asking prosecutors to investigate allegations of tax evasion, unfair competition and violation of franchise laws by Arcos Dorados.

The company said it had not been informed of the complaint and said it was confident that it was "rigorously" following Brazilian laws.

Previous legal complaints in Brazil have not affected the company and regulatory labor authorities have not taken action either.

Witnesses at the hearing called on Brazil's Congress to open an investigation into the labor practices of the fast food industry in Brazil, but that will require the signature of 80 lawmakers and concrete evidence of abuses, said Congressman Antonio Carlos Mendes Thame, who attended the hearing.

The call for an inquiry was backed by 19-year-old Lucas da Cruz Marques, who worked for 18 months at a McDonald's at a Sao Paulo metro station until he was fired last month after joining a union to press for better working conditions.

"I thought it was a good career opportunity to go and work for a multinational company," he said. Instead, he said he found a company that changed workers' shifts around to cut their pay.

(Reporting by Anthony Boadle; Editing by Ken Wills)

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