(Adds context on labor law case)
March 19 (Reuters) - McDonald's Corp on Monday said it had agreed to settle a U.S. labor board case on whether the company is accountable for its franchisees' alleged labor law violations, according to a source involved in the case.
The settlement, which must be approved by a National Labor Relations Board judge, would allow McDonald's to avoid a ruling that it is a so-called "joint employer" of workers at McDonald's franchises and can be held liable when franchisees violate federal labor law.
The terms of the proposed settlement were not immediately available.
McDonald's could not immediately be reached for comment on the proposed settlement.
Business groups have said that a ruling against McDonald's could upend the franchising model by making franchisors more vulnerable to lawsuits and requiring them to bargain with unions representing franchise workers.
Illinois-based McDonald's and the office of NLRB General Counsel Peter Robb presented the settlement to an administrative judge at a hearing in New York City, according to the source who was briefed on the hearing and spoke on condition of anonymity.
Union-backed worker advocacy group Fight for $15 said McDonald's workers across the United States were fired for taking part in protests calling for higher wages.
The judge in January had agreed to pause the trial against McDonald's that began in 2015 so Robb, an appointee of President Donald Trump, could pursue settlement talks with the company. (Reporting by Daniel Wiessner in Albany, New York; editing by Alexia Garamfalvi and Grant McCool)