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

February 10th 2015

Alicia Lutes

We're going to have to pull out the maniacal laugh for this one because — Aha! Mega-chains like McDonald's have, under recent months, come under fire regarding their unlivable wages. And now one Papa John's franchisee is going to have to pay up big: like $800,000 big.

New York State Attorney General Eric Schneiderman won his suit against Emmanuel Onuaguluchi, owner of six Papa John's outlets in the New York City boroughs of Brooklyn and Queens. Schneiderman showed that the owner audaciously "rounded down to the nearest whole hour each employee's workweek." That's wage theft. And not only that, but Onuaguluchi even attempted to sell the stores in order to flee culpability in the matter. Talk about a real Boss of the Year type, eh?

Corporations like McDonald's and Papa John's, whose stores employ roughly two-thirds of the low-wage workers in America, largely avoid liability on wage issues because they do not technically employee workers. Instead, its the franchisees, which are independently owned and operated, that hire and pay workers. Thus, when there is a dispute, workers are limited to suing the franchise owner (like Onuaguluchi), not the parent corporation (which obviously has deeper pockets).

But that could change because, thankfully, Schneiderman doesn't plan to stop there, as his win — coupled with a July ruling by the National Labor Relations Board (NLRB) that cited McDonald's was considered a joint employer — could pave the way for more serious consequences to fall on the heads of these mega-corporations. In that ruling, the NLRB said, "Our investigation found that McDonald’s, USA, LLC, through its franchise relationship and its use of tools, resources and technology, engages in sufficient control over its franchisees' operations, beyond protection of the brand, to make it a putative joint employer with its franchisees, sharing liability for violations of our Act."

If he pursues this case, expect Schneiderman to make the same argument against Papa John's.

“[The NLRB] are holding franchisors that deliberately turn a blind eye responsible,” New York franchisee lawyer Paul Steinberg told The New York Post. “It really could threaten franchising itself.”