Thursday, June 9, 2016

New York Attorney General Sues Domino's for Wage Theft

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PNN: Wage Theft

The New York State Attorney General Eric Schneiderman is suing Domino’s Pizza and three of its franchisees as joint employers for wage theft at 10 of its New York stores.

Franchisor May Be Liable as Joint Employer
New York state law allows a franchisor to be considered a joint employer if it controls or has the authority to control employees in certain key ways. Among other things, the Attorney General alleges that Domino’s exercises such control by:

  • Directing the discipline and/or termination of specific employees
  • Dictating staffing and scheduling requirements, as well as store hours
  • Imposing exacting requirements for attire, appearance, grooming, and conduct of franchisee-owned store employees
  • Inspecting franchisee employees to enforce those standards
  • Pushing an anti-union policy on its franchisees, sometimes involving direct executive interference
  • Requiring franchisee purchasers to hire prior staff (previously Domino’s direct employees)

Payroll Software to Blame
Domino’s also requires its franchisees to use its payroll software, called PULSE. According to the Attorney General’s office, Domino’s knew there were flaws in the system causing underpayment of wages but did not warn its franchisees, considering it to be a “low priority” issue. Wage and hour violations vary but include:

  • Payment of subminimum wage
  • Failure to pay overtime
  • Tip credit abuse
  • Failure to reimburse employees for expenses related to bikes and cars used for delivery purposes

The Attorney General Seeks Restitution and More
Among other things, the Attorney General’s office wants the court to:

  • Find Domino’s and its franchisees jointly liable for restitution and damages to their employees
  • Require an accounting of all employees who were underpaid
  • Compel Domino’s to fix its payroll software and notify all franchisees of its flaws
  • Demand the implementation of policies and procedures to ensure future compliance, including the appointment of an independent monitor

Read PayState Update to learn more about the lawsuit and to read the latest on state and local payroll compliance news.