McDonald's reaches $3.75 mn settlement in labor case

US fast-food giant McDonald's has agreed to pay $3.75 million to settle a labor dispute with workers at a California franchise, according to court documents seen Tuesday by AFP.

If approved by a federal judge, the agreement is the first time McDonald's has reached a deal with employees of a franchise.

The deal would resolve a class action lawsuit filed in San Francisco two years ago. Under the plan, McDonald's Corporation will pay $1.75 million to the employees and $2 million in court costs.

The employees claimed the restaurant franchise withheld wages and overtime pay, as well as reimbursement for the upkeep of uniforms, and denied them legally-required breaks.

McDonald's had previously avoided involvement in such labor disputes, saying franchises were independent of the parent company. Attorneys for the workers said the settlement would be "historic" and could open the way for other legal cases.

McDonald's told AFP, however, that it agreed to the settlement to end costly litigation.

"With this agreement, McDonald's reconfirms that it is not the employer of, or responsible for, employees of its independent franchisees," company spokesperson Terry Hickey said in an email.