A Papa John’s franchise was ordered by New York Attorney General Eric Schneiderman to pay $800,000 of stolen wages last week. The latest in a string of wage theft busts among Papa John’s franchises, Schneiderman is now considering taking legal action against the entire pizza eatery chain.
Ernstar Pizza Inc., a franchise that operates six Papa John’s restaurants in Brooklyn and Queens, was sued by the State of New York in December 2014 for rounding down its employees’ hours, underreporting hours worked, and not paying overtime. This wage theft continued for a full six years.
The franchise owner, Emmanuel Onuaguluchi, also attempted to sell his stores in order to escape indictment. Thanks to Schneiderman’s ruling last week, Onuaguluchi is banned from selling the restaurants unless the money earned from the sale is paid to an escrow account of the attorney general, which would then be paid to employees in back wages.
“This judgment sends a clear message that like every other business in New York, fast food employers must follow the law,” 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.’”
This is not the first time Papa John’s has fallen under the New York Attorney General’s critical eye. With the cooperation of the U.S. Department of Labor, Schneiderman subpoenaed sales wage records from the Papa John’s International Inc. headquarters in 2013 to investigate the state’s 127 franchises. After conducting a yearlong probe into the pay practices of several local franchises, an owner of five Papa John’s restaurants in Manhattan was indicted in October 2014 for cheating 400 employees out of $2 million in wages and expenses. In addition to underpaying them, this franchise forced delivery workers to purchase their own bicycles and helmets.
“Nobody who works 40 hours a week should have to live in poverty,” Schneiderman said after his first legal victory. “My office will combat wage theft whenever and wherever we see it in order to protect the rights of hardworking New Yorkers, including pizza-delivery workers and others who toil at fast-food restaurants.”
Less than six months later, Schneiderman is keeping true to his word. The New York Post reports that Schneiderman intends to use this latest ruling as a springboard for going after the parent company. Despite employing two thirds of all low-wage workers, corporations such as Papa John’s can escape lawsuits because their franchises are locally-owned and operated.
However, if Schneiderman can prove that the pizza chain is a joint-employer, Papa John’s International, Inc. can be found liable for the wage theft crimes of its smaller franchises. The plan is based upon a July ruling by the National Labor Relations Board, which declared McDonald’s a joint employer that was liable for discrimination and wage theft in its locations.
Wage theft is an insidious practice in fast food industries because it targets the workers who have the most need and the least power. When minimum wage workers are not paid their full due, they are less empowered to pay their bills and accumulate their savings. Confronting managers about wage theft, however, can lead to the dismissal or the reduction of hours for a fast food employee. Schneiderman’s suit in New York could provide another legal avenue for workers to reclaim their lost wages and end this vicious cycle.