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Post date: August 23 2016

A.G. Schneiderman And U.s. Department Of Labor Announce $500,000 Agreement With Papa John’S Franchisee Over Wage Violations

News from Attorney General Eric T. Schneiderman

August 23, 2016

New York City Press Office / 212-416-8060
Albany Press Office / 518-776-2427
Twitter: @AGSchneiderman


New York City Franchisee Must Pay Over 200 Workers Restitution And Damages

NEW YORK – Attorney General Eric T. Schneiderman and the U.S. Department of Labor today announced a settlement totaling $500,000 with Sultan Ali Lakhani, Moregrace LLC, and Thegrace, Inc., the owners of three Papa John’s Pizza franchise stores in Manhattan and the Bronx. The three stores violated minimum wage and overtime requirements, and also took unlawful deductions from workers’ wages caused by failure to reimburse all work-related expenses. Restitution and damages will be distributed to over 200 underpaid workers.  

“When businesses brazenly violate the law by systematically failing to pay their employees minimum and overtime wages, they rip off some of our state’s most vulnerable workers,” said Attorney General Schneiderman. “I have called on corporate leaders in the fast food industry – including Papa John’s – to step up and stop these ongoing violations, which are so pervasive in this company and industry.”

“Employers who cheat their workers out of their hard earned wages also economically undercut law-abiding competitors who pay their workers properly,” said Mark Watson, regional administrator for the Wage and Hour Division at the U.S. Department of Labor. “This joint investigation and litigation effort sends a clear message to such employers: Violate both federal and state laws and you will face the consequences at both levels.”

“This resolution exemplifies the corrective action and restitution that can be achieved on behalf of workers when state and federal agencies work together on their behalf,” said Jeffrey S. Rogoff, the regional solicitor for the U.S. Department of Labor. “We look forward to continuing our successful partnership with Attorney General Schneiderman’s office to root out wage violators and ultimately improve compliance with federal and state wage laws.”

The Manhattan stores involved in today’s settlement, operated by Moregrace LLC, are located at 701 W. 179th Street in Washington Heights and 4927 Broadway in Inwood. The Bronx store, operated by Thegrace, Inc. is located at 161 West 231st Street. The three stores are operated by Lakhani as one enterprise.

Today’s agreement follows a joint investigation into the franchisee, beginning in 2013. Lakhani admitted to the violations of law outlined in the settlement agreement. The admitted violations included the following:

  • Workers were not paid the minimum wage and overtime wages required under the federal Fair Labor Standards Act and state law;
  • Workers were not paid an additional hour at minimum wage when employees’ daily shifts were longer than 10 hours, violating New York State’s “spread of hours” regulations; and
  • Delivery workers did not receive bicycle safety equipment and were not reimbursed for bicycle maintenance costs.

In addition to payment of $500,000 in restitution funds the stores must institute complaint procedures, post a statement of employees’ rights, and designate an officer to monitor ongoing compliance and submit quarterly reports to the Attorney General's Office for three years. 

The settlement announced today is the latest with Papa John’s franchisees in New York City. Over the past two years, the Attorney General's Office has investigated and found violations by eight separate Papa John’s franchisees, who, together, operated a total of over 30 restaurants, as follows:

  • Syed Mehboob and his stores paid $400,000 in restitution and liquidated damages.  Mehboob owned and operated six individually incorporated franchise restaurants in Queens, as follows: 3320 Woodside Papa, Inc. (operating at 49-19 30th, Woodside, New York 11377 ), 99 Food, Inc. (operating at 9906 Northern Blvd., Corona, New York 11369), Sunnyside Papa, Inc. (operating at 40-12 Greenpoint Ave., Sunnyside, New York 11104), Zeeshee, Inc. (previously operated at 23-33 Astoria Blvd., Astoria, New York 11102; closed in March 2015), 193 Papa, Inc. (previously operated at 193-18 Northern Blvd. Flushing, New York 11358; sold in November 2014), and Parson Papa, Inc. (previously operated at 147-14 45th Ave., Flushing, New York 11355; closed in November 2014).  The settlement included restitution for violations from August of 2008 to August of 2014.
  • AMHC Food Inc. and its owner Mohammed Hasnat, operators of  a Papa John’s restaurant at 2241 Westchester Avenue in the Bronx, New York, paid $40,000 in restitution and liquidated damages. The settlement included restitution for violations from January of 2014 to July of 2015.
  • Ksara Corp. and owner Ghulam Fani, operators of a Papa John’s restaurant at 189 Avenue U in Brooklyn, New York.  The settlement with Ksara also included Zeman Associates, LLC, a prior owner of this franchise.  These operators paid $16,000 in restitution and liquidated damages. The settlement included restitution for violations from February of 2013 until July 2015.
  • Judy & Jesenia, Inc. and owner Jesenia Diaz, who until November 2014 operated a Papa John’s restaurant located at 3528 Nostrand Avenue in Brooklyn, New York paid $13,355.78, in restitution and liquidated damages for underpayments beginning in June of 2013 through November of 2014.
  • In February and March of 2015, Attorney General Schneiderman obtained judgments against two other Papa John’s franchisees, Emstar Pizza (6 locations) and New Majority Holdings (5 locations), for violating wage laws. Those judgments totaled almost $3 million.
  • In addition, in July of 2015, the Attorney General arrested Abdul Jamil Khokhar, the owner of nine Papa John's Pizza franchises in the Bronx, and his company, BMY Foods, Inc. for failing to pay workers minimum wage and overtime. Khokhar and BMY Foods pled guilty to these charges and were sentenced on September 21, 2016. Mr. Khokar and BMY Foods, Inc. were sentenced to pay $230,000 in restitution to workers, and Mr. Khokhar was sentenced to serve 60 days in jail. The U.S. Department of Labor also filed a consent judgment against the enterprise in federal court, and recovered an additional $230,000 as liquidated damages from Khokhar and BMY Foods, and civil money penalties of $50,000.

The Wage and Hour Division’s investigations were conducted by its New York City District Office, with assistance from the U.S. Department of Labor, Office of the Solicitor. Senior Trial Attorney Daniel Hennefeld handled the case on behalf of the Department of Labor. 

This Attorney General's investigation was handled by Assistant Attorney General Claudia Henriquez of the Labor Bureau. The Labor Bureau Deputy Bureau Chief is ReNika Moore and the Bureau Chief is Terri Gerstein. The Executive Deputy Attorney General for Social Justice is Alvin Bragg. 

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