McDonald's Is Raising Employees' Wages, But Only at Corporate Locations The pay hike will not directly impact workers at franchised locations, which comprise 90 percent of the chain's U.S. restaurants.

By Kate Taylor

Opinions expressed by Entrepreneur contributors are their own.

McDonald's has been feeling the heat from minimum wage protests. Now, the fast-food chain is making changes – but only at its corporate-owned locations.

As of July 1, starting pay at McDonald's will be at least $1 per hour more than local minimum wage, with other employees' wages adjusted accordingly. By the end of 2016, McDonald's says that the average hourly wage for employees will be more than $10 per hour.

The pay hike is a significant one for the company. The Wall Street Journal reports the wage increase will immediately boost the average hourly rate from the current figure of $9.01 to $9.90 come July.

In addition to the 10 percent raise, McDonald's is also allowing full- and part-time employees who have worked at McDonald's for at least a year to accrue personal paid time-off. If employees do not use the vacation, they will be paid for the value of that time.

Related: McDonald's Employees Claim They Were Told to Put Mustard on Burns and Keep Working

"We are acting with a renewed sense of energy and purpose to turn our business around," McDonald's CEO Steve Easterbrook said in a statement. "We know that a motivated workforce leads to better customer service so we believe this initial step not only benefits our employees, it will improve the McDonald's restaurant experience."

However, before minimum wage activists pop the champagne and bring out the Big Macs, it is important to note that these changes will only affect employees at approximately 10 percent of McDonald's locations in the U.S. The pay hike will not directly impact workers at McDonald's franchised restaurants, which make up 90 percent of the chain's 14,000 U.S. locations.

Historically, when faced with protests regarding employee pay, McDonald's has claimed that employee pay is franchisees' responsibility.

"A big part of Mike [Andres, McDonald's U.S. president's] turnaround agenda in the U.S. is, "What are we doing around the employment image and our employee-employer relationships?'" McDonald's chief administrative officer Pete Bensen said at the UBS's Global Consumer Conference in Boston in March. "In the U.S., 90 percent of our restaurants are franchised, so any minimum wage discussion or increase is really significantly impacting small business men and women around the U.S."

Related: The McDonald's Fight That Could Change Franchising

McDonald's corporate responsibility in employee issues is currently being hashed out in court. When the National Labor Relations Board (NLRB) defined McDonald's as a joint employer in labor complaints last July, the franchise industry exploded with questions and protests that the board was violating the very model upon which franchising was built. The two are now in the midst of a series of hearings before an NLRB administrative law judge in New York, Chicago and Los Angeles, with a final decision on the matter by the NLRB not expected to be released until 2016.

McDonald's is enacting one change that will impact employees at both corporate and franchised locations. The chain is expanding its Archways to Education offerings for all 750,000 employees nationally to cover the cost of high school and assist in paying for college credits and tuition.

Outside of the education program, however, it is unclear how this change will affect employees at franchised locations. McDonald's corporate has clearly stated it does not want to get involved in franchisees' employment issues. With franchisees free to make their own decisions, at least in theory, their actions now will prove just how much power the corporate franchisor holds over employees at franchised locations.

Related: McDonald's Is Trying Out All-Day Breakfast

Kate Taylor

Reporter

Kate Taylor is a reporter at Business Insider. She was previously a reporter at Entrepreneur. Get in touch with tips and feedback on Twitter at @Kate_H_Taylor. 

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Social Media

AI Is Transforming the Workplace — Including Social Media Marketing. Here's How Businesses Can Actually Use It.

Artificial intelligence is transforming social media management for small and medium-sized businesses, helping them enhance scalability, improve cost efficiency and build stronger customer relationships.

Business News

Your Old Apple AirPods Can Soon Act as an Over-the-Counter Hearing Aid, According to the FDA

The new software is compatible with the Apple AirPods Pro and accessible through iOS — for free and now FDA-authorized.

Side Hustle

This 30-Year-Old's $6,000-a-Month Side Hustle Started Making Money 'Immediately' — But He's Not Quitting His Day Job

Derrick Mathy works in orthopedic surgical device sales and is on a mission to bring people together in real life.

Business Ideas

70 Small Business Ideas to Start in 2025

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2025.

Business News

'Unprecedented in Our 53-Year History': Southwest Airlines Announces Its First Mass Layoffs Ever

The airline is eliminating 15% of its corporate workforce, including many in senior leadership positions.

Business News

Elon Musk's xAI Claims Its New Grok 3 AI Is Better Than ChatGPT and DeepSeek: 'Seeing the Beginnings of Creativity'

xAI debuted the new AI on Monday, claiming it has 10 times the computational power of Grok 2.