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New York Wage and Hour Lawsuit Nets $2M to Pizza Delivery Workers

Workers in New York have a right to be paid fairly, not only according to minimum wage and overtime laws, but also in accordance with their employment contracts and agreements. Failure to abide by these agreements is a form of wage theft, and companies will be ordered to pay for engaging in such tactics.
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A recent high-profile wage theft case in New York involves a pizza shop franchisee with five shops in Harlem. The New York County Supreme Court has ordered the business to reimburse its delivery workers more than $2 million for unpaid wages, expenses that weren’t reimbursed, various damages and interest.

The lawsuit was filed by New York Attorney General Eric Schneiderman last October. It is the latest in a string of judgments against franchise owners of the same restaurant.

Defendant owner in the case had been named by Crain’s New York Business as one of the “40 Under 40” rising stars in the area business scene. He was quoted as saying he was dedicated to making an impact on the lives of others. Unfortunately, it appears for many of his delivery drivers, that impact was a negative one.

According to the wage and hour lawsuit, the franchise owner skimmed the paychecks of some 400 delivery drivers over the course of several years. He did not pay them overtime. In some cases, he rounded hours worked down to the nearest whole hour. He also required them to cover the costs of their bicycles and other types of delivery equipment, which totaled roughly $500 annually for each. Delivery workers were also routinely paid sometimes as little as $5 hourly. At the time of the one-year investigation, launched by the state Labor Bureau, the mandated minimum wage in New York was $7.25 per hour.

One of the workers released a statement following the judge’s ruling, indicating he was not only underpaid, he was improperly classified and toiled under poor working conditions. He was paid $5 hourly and was required not only to deliver food, but also to make it, pack it up and organize boxes. In one instance, his bicycle was stolen while he was on a delivery. His bosses responded by threatening to fire him if he did not purchase another bicycle right away.

This case is the second judgment against the pizza chain. A wage theft lawsuit filed against a franchise owner operating seven stores in Queens and Brooklyn resulted in an order to pay $800,000.

Although none of the actions thus far has involved the national-level franchisor, the state attorney general’s office is reportedly considering a case against the company, as there may be room in one of the cases to make a strong argument that it is a “joint employer.” In those cases, the franchisor would maintain liability for the actions of the franchisee. It’s a legal theory that is being increasingly used as regulators crack down on the food and service industries for wage violations and poor working conditions.

If liability is established based on this legal theory, it gives workers the opportunity to pursue damages from the corporate parent – which could ultimately result in higher compensation.

This theory has been successful in at least one other case, where the National Labor Relations Board for the first time ever last summer ruled a fast food restaurant corporate owner could be considered a joint employer, meaning it would be liable to answer for labor and wage violations committed at its thousands of franchises nationwide.

The Law Offices of Ira S. Newman provides employment litigation representation in New York City, Long Island, Great Neck and throughout the area. Call 516-487-7375 or send us an e-mail.

Additional Resources:
Papa John’s To Pay $2 Million After Short-Changing New York Delivery Workers, March 5, 2015, By Laila Kearney, Reuters
More Blog Entries:
Age Discrimination Increasingly Prevalent in New York, Beyond, Sept. 27, 2015, New York Employment Attorney Blog