Andy Cheung, McDonald's Franchisee, Forced Out After Allegations Of Worker Exploitation
The Huffington Post | By Bonnie Kavoussi Posted: 03/14/2013 6:52 pm EDT

A franchisee who owns three McDonald's restaurants in Harrisburg, Pa., has left the company after allegations of worker exploitation.

Foreign guest workers -- students from Asia and Latin America -- employed by the franchisee, Andy Cheung, allege that he forced them to work shifts of up to 25 hours and pay steep rent for living in his and his son's crowded basements, according to The Nation. The workers also allege that Cheung did not pay them for all of the hours they worked and that he retaliated against them for going on strike by locking them out of their living quarters.

The guest workers paid as much as $3,000 apiece to come to the U.S. on temporary visas as part of a State Department exchange program, according to the National Guestworker Alliance, which is representing the workers. The group says Cheung deducted rent from the workers' paychecks, pushing their pay below the minimum wage.

"We were living 6 men in a basement, on bunk beds that were clearly made [for] children and one tiny bathroom," Jorge Rios, an Argentinian college student who started working for Cheung in December, told CNNMoney. The workers have filed complaints with both the Labor Department and the State Department.

Danya Proud, a McDonald's spokeswoman, told The Huffington Post in a Thursday statement that the company has taken action in response.
"The franchisee has agreed to leave the McDonald's system," Proud said. "We take the well-being of the employees working in McDonald's restaurants seriously. We began investigating the situation in Pennsylvania immediately upon learning of the issues involved."
About 20 people, including some of the guest workers, protested outside of a different McDonald's restaurant in Times Square in New York City on Thursday, according to The Nation. If McDonald's CEO Donald Thompson does not agree to meet with them,they plan to protest outside of the company's headquarters in Chicago and then at Thompson's house on Mar. 26.

Former McDonald's Franchisee Agrees To Pay Back Wages, Damages
Labor Department Had Accused Andy Cheung of Mistreating Foreign Students
Updated Feb. 18, 2014 6:49 p.m. ET – wall street journal

A former McDonald's MCD -0.11% Corp. franchisee in the U.S. who was accused of mistreating foreign students who worked for him has agreed to pay $205,977 in back wages and damages to 291 former employees, the U.S. Department of Labor said.
Early last year, 15 foreign students who had worked in McDonald's restaurants owned by Andy Cheung in central Pennsylvania filed complaints with the State Department and Labor Department saying he had underpaid them and compelled them to share cramped living quarters owned by him or his son. The students were on three-month J-1 visas for work and travel.
An investigation by the Labor Department's Wage and Hour Division found that the company through which Mr. Cheung operated his six McDonald's restaurants violated the minimum wage and overtime provisions of the Fair Labor Standards Act.
"This agreement will ensure that the rights and wages of both U.S. workers and student guest workers are protected," Al Gristina, director of the division's Wilkes-Barre District Office, said in a news release.
Mr. Cheung said on Tuesday he didn't break minimum wage laws and that he simply deducted employees' housing expenses from their paychecks, in violation of Labor Department regulations, rather than having the workers cash their paychecks and then reimburse him for rent. In a telephone interview, Mr. Cheung said he disagrees with the department's findings "but they are the ones who make the determination. I didn't do anything wrong, I just regret the way I did it."
The students, who came from Latin America and Asia, arrived in the U.S. under the Summer Work Travel Program, which the State Department's website says provides the opportunity "to experience and to be exposed to the people and way of life in the United States."
When the students arrived, they were assigned to work at Mr. Cheung's McDonald's. Some said they were given so few hours that they hardly earned any money after their boss deducted rent from their paychecks. Others said they were forced to work shifts as long as 25 hours straight without being paid for overtime.
The 15 students who filed complaints demonstrated outside one of Mr. Cheung's restaurants last March. Approximately two weeks later, McDonald's said Mr. Cheung had agreed to sell his restaurants and leave the McDonald's system.
"Mr. Cheung is no longer a McDonald's franchisee, and we have no knowledge of the settlement," a McDonald's spokeswoman said. " We take the well-being of employees working in McDonald's restaurants, including foreign student workers, seriously."
Investigators found that Cheung Enterprises made improper deductions from employee paychecks, bringing the rate of pay for some employees below the federal minimum wage of $7.25 an hour, and failed to pay some employees overtime wages. Investigators also determined that the company charged the student workers excessive rent that was deducted from their paychecks for substandard, employer-owned housing.
Of the 291 employees to whom Mr. Cheung agreed to pay back wages, 178 were foreign student workers.
In addition to the back wages and damages, Mr. Cheung has agreed to pay a $5,000 civil penalty, the Labor Department said.
Activity – Media Writing:

1) Why chosen article has a particular media writing structure:
The chosen article corresponds to a hard news lead. Indeed, the 5Ws1H questions appear clearly in the text.

Who : Foreign guest workers , franchisee Andy Cheung
What : Mc Donalds scandal : most hated company in US
When: March 2013 & 2014
Why : Work exploitation : underpaid and overworked students
How : The workers have filed complaints with both the Labor Department and the State Department.

2) Impact of the article on a particular organisation
This article had a massive impact on Mc Donald’s image. The stakeholders involved were the employees, the customers and the company itself. In fact, “An investigation by the Labor Department's Wage and Hour Division found that the company through which Mr. Cheung operated his six McDonald's restaurants violated the minimum wage and overtime provisions of the Fair Labor Standards Act.”
Employees were the top concern of the company’s headquarters as they were the main victims of this affair. Moreover, as McDonald's CEO Donald Thompson did not agree to meet with them, they were planning on protesting outside of the company's headquarters in Chicago and then at Thompson's house on Mar. 26. We can imagine the consequences that this event would have had on the rest of the world. Indeed, this case had to be taken seriously since McDonald’s restaurants are everywhere today.
At first, taking the CEO out of view was definitely not a solution. But it appears as McDonald’s PR had a positive impact in the end. Notably with Mr. Cheung’s testimony, which gave his version of the story and admitted his faults. It is important to always look sincere in front of the media in order to earn customer’s trust.
Additionally, Danya Proud had the right reaction when she decided to face the media and explained that “they took the well-being of the employees working in McDonald's restaurants seriously.” She clearly showed that she was distancing her self from the problem and accepted responsibility.
Finally, results arrived almost one year after with all the pay back wages, Mr Chung’s faults admissions and a fine of 5 000$ to pay civil penalty.