Last week, New York Attorney General Eric Schneiderman sued Domino’s Pizza Inc. and three New York franchisees for wage and hour violations. The lawsuit alleges that that from July 2008 to the present, Domino’s franchisees did not pay its delivery drivers minimum wage and failed to adequately pay overtime, due to an in-house payroll software system that undercounted hours worked by employees. Unlike many other lawsuits, this lawsuit is the first one filed by the Attorney General’s office to claim that the corporate franchisor is liable for the violations of its franchisees under a joint employer theory. It accuses the company, Domino’s Pizza LLC, of requiring its franchisees to use a computer software system that it knew was flawed and claims that it was heavily involved in individual store operations. If the state wins, it will make it harder for corporations that run franchises to avoid responsibility for the unlawful actions taken by its franchisees.
Since 2014, the New York Attorney General’s office has settled cases with many other Domino’s franchisees for wage and hour violations, including securing a $446,000 settlement for delivery workers for unpaid minimum wage and overtime, as we previously reported. And since 2011, Schneiderman has obtained more than $26 million for nearly 20,000 workers who were shorted wages.
As we stated in our previous blog, NLRB general counsel, Richard Griffin, determined that McDonald’s Corporation is jointly liable for the unfair labor practices of its franchisee operators. Consequently, last week, Griffin announced that the he has issued complaints against both McDonald’s USA LLC as well as its franchisees over alleged labor law violations on the premise that McDonald’s Corporation was a “joint employer” of workers at its franchisees. The complaints allege that McDonald’s and certain franchisees violated the rights of workers who took steps to improve their wages and working conditions by making statements and taking actions against them for participating in nationwide protests and others activities during the past 2 years. The NLRB stated that McDonald’s, through its franchise relationships, “engages in sufficient control over its franchisees’ operations, beyond protection of the brand, to make it a putative joint employer with its franchisees, sharing liability for violations.” Griffin stated is would proceed with 13 cases involving nearly 80 allegations against McDonald’s and affiliated storeowners.
This week, the general counsel of the National Labor Relations Board, Richard R. Griffin Jr., determined that McDonald’s is jointly liable for the employment actions of its franchisee operators. This ruling comes after various complaints that McDonald’s and its franchisees committed unfair labor practices, including illegal firing, threatening or penalizing workers for pro-labor activities. If McDonald’s is considered to be a joint employer, it can be held liable if one of its franchisees violates labor laws and even wage and hour laws by not paying minimum wage or overtime.
McDonald’s has approximately 13,000 franchised restaurants in the United States. Legal experts have predicted that classifying McDonald’s as a joint employer with its franchisee operators will open the door to similar classifications in other industries and companies besides McDonald’s and fast-food chains. This determination will likely be reviewed by an Administrative Law Judge and the full five-member Board in Washington.
This firm will continue to monitor the developments regarding this decision.