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Post date: April 14 2015

A.G. Schneiderman Announces Settlements With Five Domino’s Pizza Franchisees For Violating Workers’ Basic Rights In Stores Statewide

Domino’s Franchisees Must Pay $970,000 In Restitution To Workers At Dozens of Stores In Western New York, Central New York, Hudson Valley, New York City And On Long Island

The A.G. Has Secured Agreements With A Substantial Portion Of New York’s Domino’s Franchise Locations; Franchisees Have Agreed to Pay Nearly $1.5 Million In Restitution In Total To Workers Statewide

Schneiderman: To Protect The Domino’s Brand, Protect The People Who Deliver the Pizzas

NEW YORK – Attorney General Eric T. Schneiderman today announced settlements totaling $970,000 with four current Domino’s Pizza franchisees, who together own 29 stores across New York State, as well as with one former franchisee who owned 6 stores. With stores located in Cortland, Dutchess, Erie, Genesee, Monroe, Nassau, New York, Onondaga, Ontario, Orange, Rockland, Suffolk, and Westchester counties, the franchisees admitted to a number of labor violations, including minimum wage, overtime or other basic labor law protections. In light of today’s agreements – which follow similar settlements last year with the owners of 26 other Domino’s stores statewide – Attorney General Schneiderman also called on the Domino’s Pizza corporation and Chief Executive Officer Patrick Doyle to exercise increased oversight of Domino’s franchisees’ pay practices.

“In the past two years, the owners of over fifty New York Domino’s franchise locations have admitted to violations of some of the most basic labor law protections – an appalling record of ongoing disregard for workers’ rights,” Attorney General Schneiderman said. “Franchisors like Domino’s need to step up to the plate and fix this problem. Franchisors routinely visit franchise stores to monitor operations – down to the number of pepperonis on each pizza – to protect their brand, and yet they turn a blind eye to illegal working conditions. My message for Domino’s CEO Patrick Doyle is this: To protect the Domino’s brand, protect the basic rights of the people who wear the Domino’s uniform, who make and deliver your pizzas.”

Today’s agreements followed investigations by the Attorney General’s Office into the franchisees, covering the time period from 2008 through 2014. All investigated franchisees admitted to the violations of law outlined in the settlement agreements. The admitted violations varied by location and time period, and included the following:

  • Some stores paid delivery workers below the tipped minimum wage applicable to delivery workers under New York law. 
  • Some stores failed to pay overtime to employees who worked over 40 hours in a week, and others under-paid overtime, because they did not combine all hours worked at multiple stores owned by the same franchisee, or because they used the wrong formula to calculate overtime for tipped workers, unlawfully reducing workers’ pay.
  • Delivery workers who used their own cars to make deliveries were not fully reimbursed for their job-related vehicle expenses. 
  • Delivery workers who used their own bicycles to make deliveries were typically not reimbursed for any expenses related to maintaining their bicycles, nor were they provided with protective gear as required by New York City law.
  • Some stores violated a state requirement that employers must pay an additional hour at minimum wage when employees’ daily shifts are longer than 10 hours. 
  • Some stores also violated a state requirement that employers must pay restaurant workers for at least three hours of work when those employees report to work for a longer shift but are ultimately sent home early because of slow business or other reasons.
  • Some stores took a "tip credit" without tracking tips, and assigned delivery workers to kitchen or other untipped work for more time than legally permitted. Employers may only take a “tip credit” and pay a lower minimum wage to tipped restaurant employees if those employees earn enough in tips and spend most of their time – at least 80 percent –performing tipped work.

A list of all of the Domino’s franchisees and the restaurant locations that have reached settlements with the Attorney General’s Office can be found here.

In addition to payment of $970,000 in restitution funds, the franchisees must also institute complaint procedures, provide written handbooks to employees, train supervisors on the labor law, post a statement of employees’ rights, and designate an officer to submit quarterly reports to the Attorney General's Office regarding ongoing compliance for three years.

The largest franchisee to reach an agreement today, Robert Cookston, is paying $675,000 to settle the charges against him. In 2013, his Washington Heights store was the subject of a separate investigation for retaliatory discharge, which was ultimately resolved when all 25 discharged employees were reinstated pursuant to an agreement with the Attorney General’s Office. In today’s agreement, in addition to paying restitution to these and other workers, Mr. Cookston agreed to pay for independent monitoring of all of his stores for three years.

Today’s five agreements follow settlements announced last year with six Domino’s pizza franchisees, who together owned 23 stores and agreed to pay a total of $448,000 in restitution, as well as an additional settlement last year with a franchisee, Abdil Karaborklu, who paid $40,000 to resolve a case involving his three stores. Some of the stores investigated by the Attorney General in today’s announcement and last year changed hands among franchisees during the period of the investigation.

In total, franchisees investigated by the Attorney General have admitted violations of basic labor law protections in a total of 57 distinct Domino’s store locations in New York. Collectively, the Attorney General’s agreements have required franchisees to pay nearly $1.5 million in restitution to underpaid employees in Domino’s stores.

There were approximately 130 total Domino’s franchisee store locations statewide in 2014, according to Domino’s disclosure documents. Nationally, over 90 percent of Domino’s locations are franchisee-owned.

The Attorney General continues to investigate additional Domino’s franchisees in New York.

In addition to investigations involving Domino’s restaurants, the Attorney General’s office has brought a number of additional cases in the fast food industry.

  • In February, a judge awarded a judgment of over $2 million in unpaid wages and penalties to the Attorney General against New Majority Holdings, LLC, a New York City-based Papa John’s franchisee, and its owner Ronald Johnson.
  • In January, the Attorney General obtained a judgment for nearly $800,000 against Emmanuel Onuaguluchi, the operator of Emstar Pizza Inc., another New York City-based Papa John’s franchisee.
  • In June 2014, the Attorney General obtained $10,000 in restitution for an employee unlawfully discharged after reporting a gas leak at a McDonald’s franchise located in Lyons, in upstate New York.
  • In March 2014, the Attorney General secured a settlement of almost $500,000 for mostly minimum-wage employees of a group of seven New York City-based McDonald’s franchises.

The cases were handled by Labor Bureau Section Chief Andrew Elmore and Assistant Attorneys General Claudia Henriquez, Kevin Lynch and Haeya Yim, assisted by Assistant Attorney General Justin Deabler of the Civil Rights Bureau.  Terri Gerstein is the Labor Bureau Chief and Alvin Bragg is the Executive Deputy Attorney General for Social Justice.

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