New York Attorney General Says Domino’s Pizza Is “Joint Employer” in Wage Theft Scheme

June 3, 2016

A lawsuit brought by New York Attorney General Eric Schneiderman accuses Domino’s Pizza of under-paying delivery workers and other forms of wage theft at ten locations across New York state. As a result, according to the lawsuit, restaurant workers have been shorted more than a half-million dollars in hard-earned pay.

The lawsuit names Domino’s Pizza, Inc., the franchisor, as a defendant, which makes this case quite significant. It alleges that Domino’s “was intensely involved in store operations, and even caused many of these violations,” making it a “joint employer,” along with the individual franchisee employers, under the New York Labor Law. The supporting allegation focus on the substantial control Domino’s headquarters’ exerted over franchisees and workers, including:

  • Hiring, discipline, and termination decisions
  • Staffing and scheduling policies
  • Employee attire, appearance, grooming, and conduct requirements
  • Anti-union efforts.

The Attorney General’s strategy of including the franchisor as a defendant is consistent with a recent trend under federal and state labor laws of holding franchisors responsible for underpaying workers at franchised restaurants. The U.S. Department of Labor recently issued an Administrator’s Interpretation explaining that, under the federal Fair Labor Standards Act, the “growing variety and number of business models and labor arrangements have made joint employment more common.”

Outten & Golden LLP, along with co-counsel, is making similar arguments in a lawsuit against Jimmy John’s Franchise, LLC, related corporate entities, and some of its franchisees. The class action suit alleges that the Jimmy John’s franchisor misclassified assistant managers at its corporate-owned stores as well as franchise-owned stores as exempt “executives” and denied them overtime pay. In one opinion, the judge ordered that all Jimmy John’s assistant managers throughout the country should receive notice of the lawsuit.

The Dominos lawsuit claims that Domino’s and its franchisees failed to pay employees the minimum wage, withheld overtime pay, abused tip credit practices, and failed to reimburse workers for expenses. It is also alleged that the PULSE payroll software that Domino’s headquarters sold to franchisees systematically reduces and underreports employee hours, a problem about which the company has known since 2007 but has not fixed.

This not the first time Domino’s has been in the Attorney General’s crosshairs for suspected wage theft. As reported in The New York Times, in 2014 Mr. Schneiderman successfully recovered $448,000 from 23 Domino’s stores, the same year an other Domino’s franchisee in the state agreed to a $1.3 million settlement over claims that it denied workers a mandatory meal break, failed to pay for uniforms, and required employees to clean ovens, wash floors, distribute fliers and other untipped work without paying the minimum wage.

(*Prior results do not guarantee a similar outcome.)