A judge in New York has ordered a Papa John’s franchisee to pay nearly $800,000 over allegations that the operator underpaid employees and didn’t pay overtime.
Emstar Pizza Inc., which operates seven Papa John’s locations in Brooklyn and Queens, N.Y., along with its owners, Emmanuel and Uchenna Onuaguluchi, were ordered to pay workers $789,507.06 in unpaid wages, damages, interest and other costs.
The attorney general sued the franchisee in December, alleging that Emstar underreported hours worked by employees over the past six years, rounded hours down to the nearest whole hour and didn’t pay overtime.
The order also prevents Emstar Pizza from selling any units unless proceeds from the sale are held in escrow until the attorney general can distribute funds to current and former workers.
“This judgment sends a clear message that like every other business in New York, fast food employers must follow the law,” New York State attorney general Eric Schneiderman said in a statement. “This Papa John’s franchisee brazenly violated the law, shaving employees’ hours and avoiding paying overtime by various means, including giving managerial sounding titles such as ‘head driver.’
According to the New York Post, Schneiderman was considering an action against the franchisor, Papa John’s International Inc. That would be another test of the National Labor Relations Board’s decision to consider McDonald’s Corp. a joint employer of workers employed by franchisees. The decision could make franchisors liable for the employment actions of operators.
A spokeswoman for Schneiderman would not comment on the Post report.
“As a company, Papa John’s International believes that all of its team members should be fairly compensated with market competitive rates and in accordance with the law,” a Papa John’s spokeswoman said in a statement. “Papa John’s does not control or dictate independent franchisees’ employment activities, including the hiring, firing and compensation of their employees. Papa John’s International does not operate any company-owned restaurants in the state of New York.”
The U.S. Department of Labor provided information to help the New York attorney general with the case.
Earlier, Schneiderman had won a restraining order against Emstar preventing the company from selling any units after apparently discovering that the franchisee was trying to sell the locations. That would have frustrated efforts to recoup wages owed to employees, the attorney general said.
The judgment comes amid growing scrutiny over the pay of quick-service employees, and the role and legal liability of franchisors. Schneiderman’s office had previously reached settlements out of court with franchisees of Domino’s Pizza and McDonald’s over the past two years.
In addition, the attorney general has sued another Papa John’s operator, New Majority Holdings LLC, accusing the franchisee of underpaying workers. The case is pending.
Contact Jonathan Maze at [email protected].
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