Justice

Papa John's Just Suffered a Big Blow

October 19th 2015

By:
Alex Mierjeski

Franchisees who own a total of nine Papa John's restaurants in New York City will pay nearly $500,000 in back wages and damages to more than 250 employees. This follows an investigation into wage violation allegations, done by New York Attorney General Eric Schneiderman.

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WHAT IS WAGE THEFT?

Anyone who's ever punched out, then made to sweep or take out the trash should have a good idea of what wage theft is. Basically, any time that monetary compensation doesn't find its way to the person working for it means that there's been a wage theft violation. This can mean anything from being forced to work after clocking out, having tips stolen, not being given the appropriate rest or food breaks, or working off the books or for piece rate.

According to the University of California Los Angeles Labor Center, wage theft is a bigger problem than you might realize; in LA alone, it accounts for about $26.2 million in lost wages each week. But many workers in low-paying jobs face difficult and time-consuming processes in reporting stolen wages, so the problem often goes unabated.

WHY IS PAPA JOHN'S IN TROUBLE?

The investigation into workers' complaints (the results of which were released last week) is just the latest investigation targeting the pizza chain, and Schneiderman's office's latest investigation in a broader effort to enforce wage and employment laws.

"Once again, we've found Papa John's franchises in New York that are ripping off their workers and violating critical state and federal laws," Schneiderman said in a statement. "Once again, I call on Papa John's and other fast food companies to step up and stop the widespread lawlessness plaguing your businesses and harming the workers who make and deliver your food."

Papa John

The investigation was conducted jointly between Schneiderman's office and the U.S. Department of Labor's (DoL) Wage and Hour Division, targeting nine restaurants in neighborhoods spanning Queens, Brooklyn, and the Bronx. Employers at those locations admitted to violating minimum wage laws, overtime, and other basic labor protection laws, according to an official release. The pay out will be spread over 250 employees, covering violations stretching back to 2008 including back wages, liquidated damages, and civil money penalties.

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As the Huffington Post reported, wage theft violations are frequently treated as civil cases, though Schneiderman's office has made a name for itself pushing for criminal charges in similar cases. The New York Wage Theft Prevention Act, passed in 2011, increased penalties for employers who fail to pay employees and keep records, making criminal charges possible. Though thanks to the franchise model of restaurants like Papa John's, the parent company is not included in the case and does not face penalties.

Papa John's did not respond to a request for comment on its franchisees' violations.

The new charges follow two recent cases also involving the pizza chain, totaling an estimated $3 million in penalties.

"Employers who underpay their employees not only deprive workers of the funds needed to buy their food, pay their rent or attend to other necessities, they undercut those law-abiding employers who pay their employees properly in the first place," David Weil, an administrator for the Wage and Hour Division at the DoL, said in a statement. "Although franchising is a legitimate business model, it can also be associated with practices that lead to violations of labor standards."

"Franchisees must understand that they are not exempt from the law," Weil added.

A ruling by the National Labor Relations Board earlier this summer suggested that parent companies could be considered joint employers with their franchises, thus opening them up to greater scrutiny in cases involving things like wage theft. That decision is still pending.

RELATED: Papa John's Franchise Ordered to Pay $800,000 in Stolen Wages