Five Domino’s franchisees will pay $970,000 to settle allegations that they engaged in labor law violations.
New York Attorney General Eric Schneiderman also called on the Domino’s Pizza corporation and Chief Executive Officer Patrick Doyle to exercise increased oversight of Domino’s franchisees’ pay practices.
“In the past two years, the owners of over fifty New York Domino’s franchise locations have admitted to violations of some of the most basic labor law protections – an appalling record of ongoing disregard for workers’ rights,” Attorney General Schneiderman said. “Franchisors like Domino’s need to step up to the plate and fix this problem. Franchisors routinely visit franchise stores to monitor operations – down to the number of pepperonis on each pizza – to protect their brand, and yet they turn a blind eye to illegal working conditions. My message for Domino’s CEO Patrick Doyle is this: To protect the Domino’s brand, protect the basic rights of the people who wear the Domino’s uniform, who make and deliver your pizzas.”
The investigations by the Attorney General’s Office into the franchisees, covering the time period from 2008 through 2014.
All investigated franchisees admitted to the violations of law outlined in the settlement agreements.
The admitted violations varied by location and time period, and included the following:
Some stores paid delivery workers below the tipped minimum wage applicable to delivery workers under New York law.
Some stores failed to pay overtime to employees who worked over 40 hours in a week, and others under-paid overtime, because they did not combine all hours worked at multiple stores owned by the same franchisee, or because they used the wrong formula to calculate overtime for tipped workers, unlawfully reducing workers’ pay.
Delivery workers who used their own cars to make deliveries were not fully reimbursed for their job-related vehicle expenses.
Delivery workers who used their own bicycles to make deliveries were typically not reimbursed for any expenses related to maintaining their bicycles, nor were they provided with protective gear as required by New York City law.
Some stores violated a state requirement that employers must pay an additional hour at minimum wage when employees’ daily shifts are longer than 10 hours.
Some stores also violated a state requirement that employers must pay restaurant workers for at least three hours of work when those employees report to work for a longer shift but are ultimately sent home early because of slow business or other reasons.
Some stores took a “tip credit” without tracking tips, and assigned delivery workers to kitchen or other untipped work for more time than legally permitted. Employers may only take a “tip credit” and pay a lower minimum wage to tipped restaurant employees if those employees earn enough in tips and spend most of their time – at least 80 percent –performing tipped work.
In addition to payment of $970,000 in restitution funds, the franchisees must also institute complaint procedures, provide written handbooks to employees, train supervisors on the labor law, post a statement of employees’ rights, and designate an officer to submit quarterly reports to the Attorney General’s Office regarding ongoing compliance for three years.
The largest franchisee to reach an agreement today, Robert Cookston, is paying $675,000 to settle the charges against him.
In 2013, his Washington Heights store was the subject of a separate investigation for retaliatory discharge, which was ultimately resolved when all 25 discharged employees were reinstated pursuant to an agreement with the Attorney General’s Office.
In the agreement, in addition to paying restitution to these and other workers, Cookston agreed to pay for independent monitoring of all of his stores for three years.
The five agreements follow settlements announced last year with six Domino’s pizza franchisees, who together owned 23 stores and agreed to pay a total of $448,000 in restitution, as well as an additional settlement last year with a franchisee, Abdil Karaborklu, who paid $40,000 to resolve a case involving his three stores.
Some of the stores investigated by the Attorney General in today’s announcement and last year changed hands among franchisees during the period of the investigation.
There were approximately 130 total Domino’s franchisee store locations statewide in 2014, according to Domino’s disclosure documents.
Nationally, over 90 percent of Domino’s locations are franchisee-owned.
The Attorney General continues to investigate additional Domino’s franchisees in New York.
In February, a judge awarded a judgment of over $2 million in unpaid wages and penalties to the Attorney General against New Majority Holdings, LLC, a New York City-based Papa John’s franchisee, and its owner Ronald Johnson.
In January, the Attorney General obtained a judgment for nearly $800,000 against Emmanuel Onuaguluchi, the operator of Emstar Pizza Inc., another New York City-based Papa John’s franchisee.
In June 2014, the Attorney General obtained $10,000 in restitution for an employee unlawfully discharged after reporting a gas leak at a McDonald’s franchise located in Lyons, in upstate New York.
In March 2014, the Attorney General secured a settlement of almost $500,000 for mostly minimum-wage employees of a group of seven New York City-based McDonald’s franchises.