State sues pizza chain for illegally underpaying workers
The feds aren’t the only authorities cracking down on alleged illegal pay practices.
New York State Attorney General Eric T. Schneiderman recently announced a lawsuit against Domino’s Pizza, Inc., Domino’s Pizza LLC and Domino’s Pizza Franchising LLC (collectively, “Domino’s”) and three Domino’s franchisees, alleging that they underpaid workers at least $565,000 at ten stores in New York.
The lawsuit claims that Domino’s is a joint employer of the workers at the 10 franchise locations, and is therefore responsible for underpaid wages to these workers. This is the first case in which the AG’s office has alleged that a fast food corporation is liable as a joint employer for labor violations at its franchise stores.
A multi-year investigation by Schneiderman’s office revealed that Domino’s allegedly urged franchisees to use payroll reports from the company’s computer system (called “PULSE”), even though Domino’s knew for years that PULSE under-calculated gross wages. Domino’s typically made multiple updates to PULSE each year, but decided not to fix the flaws that caused underpayments to workers, deeming it a “low priority,” according to the AG’s office.
Joint employer relationship?
The lawsuit also alleges that Domino’s is a joint employer because the company micromanaged employee relations at its franchisee stores. The AG alleged the company played a role in the hiring, firing, and discipline of workers; pushed an anti-union position on franchisees; and closely monitored employee job performance through onsite and electronic reviews.
The Attorney General’s Office has already settled cases with 12 Domino’s franchisees, who collectively own 61 stores and who have agreed to pay approximately $1.5 million to date.
The Attorney General’s investigation uncovered internal documents produced by Domino’s showing that over a two-year period, 78% of New York franchisees listed rates for at least some employees below the required minimum wage, and 86% listed rates below the required overtime rate.
Domino’s is the world’s second largest pizza restaurant chain, and is the largest pizza delivery chain in the U.S. The company has 136 franchisee-owned stores in New York, along with 54 owned by Domino’s itself.
