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McDonald’s CEO Out After Acknowledging Relationship With Employee

On Behalf of | Nov 6, 2019 | Employment Law |

Steve Easterbrook, McDonald’s CEO since 2015, has been ousted by the board of directors after admitting to engaging in an allegedly consensual relationship with a subordinate. McDonald’s, which has suffered from accusations of sexual harassment against many of its franchisees, has a policy forbidding managers from having any romantic relationship with a subordinate, direct or indirect.

According to the Associated Press, the board said that Easterbrook had demonstrated poor judgment. In an email to employees, the ousted CEO admitted to the relationship and said that it had been a mistake.

“Given the values of the company, I agree with the board that it is time for me to move on,” he said.

The AP reports that the board conducted a thorough internal review of the situation and that the ouster is not related to McDonald’s operations or financial performance.

McDonald’s chief people officer has also left the company, effective immediately. The company did not say whether his departure was related to the firing of Easterbrook.

Easterbrook will apparently receive 26 weeks’ severance pay and a prorated incentive payment for fiscal year 2019, and he can access any stock options that have already vested or that will vest within three years. His 2018 salary was $1.3 million, and his total compensation for 2018 was $15.9 million.

Easterbrook is also prohibited by a non-compete agreement from working for a competitor for two years.

Is it legal for companies to prohibit dating subordinates?

Generally, yes. Some companies have policies prohibiting all dating amongst staff, while others prohibit dating between direct reports or between any leader and any subordinate, as is the case at McDonald’s. These policies can seem intrusive, but they are typically legal.

A policy forbidding relationships between managers and subordinates is often intended to prevent quid pro quo sexual harassment, where a subordinate is promised career benefits, or threatened with career harm, in exchange for an unwanted sexual relationship.

McDonald’s may have good reason for having such a policy. Earlier this year, a group called “Fight for $15” filed dozens of sexual harassment complaints against the company over behavior among franchisees. The group argues that the McDonald’s company should have some liability for what it claims is widespread sexual harassment at franchisees. It says the company’s response to the allegations has been inadequate.

If your company is interested in setting a non-dating policy, discuss your situation with an experienced employment law attorney.