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In a recent wage and hour lawsuit, a New York judge ordered a Papa John’s franchise location to pay nearly $800,000 in unpaid wages. Emstar Pizza Inc., the company operating seven different Papa John’s pizza locations in Brooklyn and Queens, N.Y., has been ordered to pay $789,507.06 in unpaid wages, interest, and other damages.
The owners are expected to pay the amount after being found guilty of violating state and federal minimum wage regulations. This order also prevents Emstar Pizza from selling any units unless proceeds from the sales are held in escrow. This stands until the settlement fund can be distributed to current and former employees.
The plaintiff party accuses the owners of deliberately misreporting hours they worked for the past six years; they had rounded down to the nearest whole hour to avoid paying overtime. The decision had been made based on the increasing pressure of the treatment of certain minimum wage employees, like quick-service employees, and the role and legal liability of the franchise owners.
The plaintiff’s lawyers had vast experience in this field, successfully reaching wage and hour settlements involving Domino’s Pizza and McDonald’s over the past two years. The lawyers are hopeful that Papa John’s settlement will send a message to other New York fast food employers that they must follow all wage and hour laws.
“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,’” said the lead plaintiff lawyer.
According to the New York Post, the plaintiffs’ lawyers were also considering taking legal action against Papa John’s International Inc., to gauge the reaction of the National Labor Relations Board. Depending on the board’s reaction, the McDonald’s Corporation may also be affected by this case because the company is partnered with the Papa John’s franchise. The decision could make both franchisors liable for the employment actions of their franchise owners. The U.S. Department of Labor and the New York attorney general had provided their assistance with this case, which helped garner sufficient evidence.
As mentioned before, the plaintiff attorneys had successfully obtained an order prohibiting Emstar from selling any locations. This was done because it had been discovered that the franchisee had been trying to sell these stores during the litigation process, which would have made the process of paying lost wages to employees all the more difficult.
Papa John’s International has been cooperative through the settlement, and states that their employees should be fairly compensated for any missed work. However, the company also stated that it does not control or dictate how independent franchise owners handle their employment activities.
Overview of Wage and Hour Complications
In the past few years wage and hour violations have risen, with most allegations pertaining to unpaid wages or unpaid overtime. This typically occurs from budgeting cuts or panic from employers, who are trying to use every possible option to save money. Unfortunately, this leads to a severe disservice to their employees, who are left without overtime pay. Some employees have even been purposefully misclassified to be exempt from overtime. This directly violates the Fair Labor and Standards Act (FLSA), which requires employers to pay overtime to employees who work 40 hours a week or more.
Additionally, employees can also earn extra wages when they work ‘off-the-clock,’ which means that they are working when it is not reported on their time card. This can lead to employees having their pay undercut, which often means missing out on overtime monies due.
In addition to federal regulations, each state has their own wage and hour policies that it may impose when paying overtime. All employers must follow state and federal wage and hour regulations when paying minimum wage employees; they can and will face legal consequences if they are found in violation.
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