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Post date: May 1 2015

A.G. Schneiderman Announces $375k Settlement With KFC Franchise For Underpaying More Than 700 Workers In NYC

KFC Franchisee And Owner Failed To Pay Workers For All Hours Worked And Failed To Pay Proper Overtime, Along With Other Labor Law Violations

Schneiderman: We Will Continue To Root Out Wage Theft In New York

NEW YORK – Attorney General Eric T. Schneiderman today announced a $375,000 settlement with KFC Corporation franchisee Divine Investors, LLC, which operates 13 stores in Brooklyn, Queens and Upper Manhattan. Under today’s settlement, the company and its owner Hiren Patel have agreed to pay restitution for several labor law violations, including requiring employees to continue to work after they clocked out, not paying all required overtime, failing to cover the cost of laundering employees’ uniforms and more. More than 700 current and former employees are eligible for restitution under this settlement.

“This KFC franchisee ignored certain basic laws protecting his low wage workers, and this is simply not acceptable,” said Attorney General Schneiderman. “In New York, we have one set of rules for everyone, and all employers must comply with our labor laws. I will continue to do everything in my power to protect fast food and other low wage workers in New York from wage theft.”

During the course of its investigation, the Attorney General’s Office found that Divine and Mr. Patel:

  • Regularly failed to pay proper overtime to employees who worked at more than one location and whose combined hours exceeded 40 per week;
  • On occasion required employees to continue working after clocking out;
  • Treated certain managers as exempt from the overtime pay requirement, while paying those managers less than the salary amount required for doing so; 
  • Failed to pay employees “uniform maintenance allowance,” required under the Labor Law when employers require employees to wear uniforms at work, and failed to provide laundry service or sufficient numbers of uniforms;
  • Never paid employees “spread of hours” pay, an additional hour of pay required by the Labor Law for shifts in which the interval between the start and end time was longer than 10 hours;
  • Failed to compensate workers for “call-in pay,” or compensation for being called in to work and then being sent home before clocking in or being sent home early; and 
  • Required cashiers to pay cash register shortages out of their pocket in order to keep their jobs;

"Finally we're getting some restitution for the way we were treated on the job," said Shenita Simon, a mother of four who worked at a KFC franchise owned by Mr. Patel from 2011 to 2014. "No one deserves to be intimidated on the job or have their wages stolen. This settlement is proof that when workers join together, we're able to hold our employers accountable to the law. It is a good first step in ensuring that all low-wage workers in New York State are treated with dignity and respect."

More than 700 current and former Divine employees are eligible to receive restitution from the $375,000 settlement fund, which covers the period of November 2011 to September 2014.

In addition to the payment of restitution, Divine will designate internal compliance officers responsible for ensuring labor law compliance going forward. For three years, the compliance officers will provide Attorney General’s Office with quarterly reports and payroll documents to ensure that Divine complies with labor laws.

After the investigation began, Mr. Patel purchased an additional 27 KFC locations in New York under different corporate names. Those 27 locations will also be subject to future compliance requirements of the settlements.

Since 2011, Attorney General Schneiderman has successfully secured more than $20 million in restitution for more than 17,000 workers across New York, and recovered more than $2 million in restitution and penalties for the state. This year alone, the Attorney General has taken a number of actions to combat labor law violations:

Today’s settlement is a part of ongoing investigations of numerous fast food employers by the Attorney General’s Labor Bureau.

The Attorney General thanked Fast Food Forward for bringing the case to the Attorney General’s attention.

Anyone who is aware of a violation of workplace rights in New York State is encouraged to file a complaint with the Office of the Attorney General by filling out a complaint form or by calling the Labor Bureau at (212) 416-8700.

The case was handled by Assistant Attorney General Donya Fernandez, with the assistance of Special Counsel Patricia Kakalec, Assistant Attorney General Benjamin Holt and Legal Assistant Yadira Filpo. Terri Gerstein is the Labor Bureau Chief, and Alvin Bragg is the Executive Deputy Attorney for Social Justice.