New York accuses Domino’s of wage theft in lawsuit
Company, three of its franchisees underpaid workers, suit claims
U.S. fast-food giant Domino’s Pizza and three of its franchises could be required to pay employees a lot of dough if a newly filed New York lawsuit succeeds.
The nation’s largest pizza delivery company and three of its franchisees underpaid workers at least $565,000 at 10 New Yorkbased stores, the state’s top legal official alleged in a court action announced Tuesday.
Filed by New York Attorney General Eric Schneiderman, the lawsuit charges that Domino’s it- self should be legally deemed a joint employer of workers at the 10 franchise locations because the company played an active role in hiring, firing and disciplining store staffers and closely monitored job performance.
The company’s oversight included requirements for employees, attire, appearance and grooming, including restrictions on the diameter of earrings and color of undershirts, an investigation by Schneiderman’s staff found.
Domino’s urged franchise operators to use the company’s “PULSE” computer system even though executives knew the system had undercalculated gross wages for years, the investigation found. Domino’s decided not to fix the flaw, treating the issue as a “low priority,” the investigation also concluded.
The pizza giant and its franchisees used the PULSE system nationwide, the investigation found. Schneiderman, whose legal jurisdiction is limited to New York, plans to flag the investigation findings to legal counterparts in other states who potentially could check for similar wage violations.
“At some point, a company has to take responsibility for its actions and for its workers’ well-being,” Schneiderman said in a formal statement. “Under these circumstances, New York law — as well as basic human decency — holds Domino’s responsible for the alleged mistreatment of the workers who make and deliver the company’s pizzas, and it is incumbent upon Domino’s to fix the problems.”
Asked for comment, Domino’s released copies of a March 18 letter to Schneiderman’s office that included a proposal for paying restitution to employees who were underpaid by the company’s franchises. The proposal also included measures to prevent future violations.
However, drawing a distinction between the company and its franchisees, the letter said Domino’s made the proposal in an ef- fort to find solutions, “rather than because of any direct or vicarious obligation to do so.”
Ann Arbor, Mich.-based Domino’s is the world’s second-largest pizza restaurant chain, behind Pizza Hut. The company operates roughly 12,500 stores in more than 80 countries, including the U.S.
According to the company’s data, franchise owners, including 850 in the U.S., account for 97% of all Domino’s locations.
The alleged legal violations at the New York stores varied, the lawsuit said, but included:
Paying workers less than the legal minimum wage rate.
Failing to pay all overtime required by law.
Neglecting to reimburse workers fully for costs related to use of their motor vehicles or bicycles for deliveries.