In May 2016, the New York State Attorney General (AG), Eric Schneiderman, filed a lawsuit against three Domino’s franchise owners and Domino’s Pizza (corporate) for underpaying workers. In March 2017, the three franchisees agreed to pay $480,000.00 in restitution to employees who were under-compensated at ten restaurants. The AG’s office previously settled similar cases with 12 other Domino’s franchisees who collectively own 61 stores, and who agreed to pay well over $1 million dollars in unpaid wages.
As part of the newest settlement with the franchise owners, Domino’s Pizza will remain a defendant in the case. The AG believes there are additional wage violations to address that are taking place in Domino’s restaurants across New York State. This case stands apart from prior matters brought by the AG against Domino’s franchisees and those of another large pizza business, Papa John’s, as the AG is targeting corporate Domino’s as an entity responsible for the violations. Domino’s Pizza strongly insists that the responsibility of paying wages to employees falls solely within the responsibility of individual franchisees and not the corporate office.
Franchisees were often considered to be independently responsible for their employment-related decisions and subsequent violations. Parent corporations have long argued, quite successfully, that they are licensing their brands, products, and name to the franchisees, who are responsible for complying with laws regarding employment and wages. This defense may no longer be working.
In 2014, as reported by Consumerist, the National Labor Relations Board ruled that “McDonald’s and the chain’s franchisees were joint employers since the licensing company really exerts control over the franchisees’ labor and pay practices.” This element of control is crucial to the argument that McDonald’s claims were without “legal or factual basis.” The attorney for the New York City employees in that case, stated: “McDonald’s requires franchisees to adhere to such regimented rules and regulations that there’s no doubt who’s really in charge.”
For Domino’s employees, the McDonald’s matter may be the precedent needed to hold the corporation accountable for the franchisee’s wage violations. Domino’s faces accusations that they have violated minimum wage as well as overtime pay laws. Drivers, according to the AG, suffered the most as they “did not receive full reimbursements when using their personal vehicles, and whose pay was calculated incorrectly based on the minimum tipped wage in New York State.”
The Attorney General argues that Domino’s Pizza exerts sufficient control over the franchisees as to be responsible for the violations. The state points in particular to the fact that corporate has actively encouraged the franchise owners to utilize a specific computer system to track employees’ hours; a system that Domino’s Pizza knew tended to under-calculate pay. USA Today reported that the AG’s office also found that “the company’s oversight included requirements for employees’ attire, appearance, and grooming, including restrictions on the diameter of earrings and color of undershirts.”
Will these links be able to demonstrate enough control to hold corporate responsible? Time will tell. But Schneiderman feels strongly that Domino’s Pizza is knowingly engaging in systemic violations of wage, hour, and employment law across New York. In a statement, the attorney general made it clear that “We will not allow businesses to turn a blind eye to blatant violations that are cheating hard working New Yorkers out of a fair day’s pay.”
Leeds Brown Law, P.C, handling cases in New York City and across the state, has experience with unpaid wages, unpaid overtime and other employment and labor law violations. If you have questions about your rights to receive minimum wage, tips, or overtime, call us for a free consultation. You can reach us 24/7 at 1-800-585-4658.