BUSINESS
03/27/2014 12:00 am ET | Updated Mar 27, 2014

Domino's Franchisees Settle Wage Theft Investigation In New York For $448,000

Damon Dahlen/Huffington Post

The owners of 23 Domino's Pizza locations in New York agreed Thursday to pay workers nearly half a million dollars to settle a wage-theft investigation by the office of state Attorney General Eric T. Schneiderman.

Schneiderman's office says it uncovered a raft of labor law violations that occurred between 2007 and 2013 at the stores, which are owned by six franchisees. Those include delivery workers being paid below the $5.65 tipped minimum wage they were entitled to, workers not being paid for overtime worked beyond 40 hours, and delivery drivers not being fully reimbursed for their auto expenses.

The $448,000 restitution fund will be divvied up among 750 current and former Domino's workers, most of whom will get between $200 and $2,000. The settlement comes on the heels of a similar deal reached by Schneiderman's office last week, when it settled an investigation bringing nearly $500,000 to McDonald's workers in New York City who said they'd been shorted on pay.

"The violations in these cases demonstrate a statewide pattern of Domino's franchisees flouting the law and illegally chiseling at the pay of minimum-wage workers, who struggle to survive," Schneiderman said in a statement. "My office will be relentless in pursuing fast-food employers who underpay the hardworking people who are the backbone of their operations."

The franchisees have admitted to the violations, according to Schneiderman's office. The attorney general listed all of the franchisees and their restaurants, which span eight New York counties, on the state website.

None of the restaurants in the settlement were operated by Domino's. A Domino's spokesman said the company wasn't aware of the lawsuit and wouldn't comment on it.

Wage theft allegations are common in the fast-food industry, where most workers don't earn much more than the minimum wage. The sector's pay practices have become part of a broader national discussion on income inequality, thanks in large part to the strikes and protests staged by fast-food workers throughout the country over the past year.

Fast Food Forward, the union-backed group that helped organized those strikes, issued a statement calling the Domino's franchise settlement a "huge victory." Naquasia LeGrand, a Brooklyn KFC employee and member of the group, also criticized companies like McDonald's and Domino's for distancing themselves from their franchisees' actions.

"[F]ast food corporations like Domino’s and McDonald’s cannot hide from their responsibility for these unlawful practices," LeGrand said in the statement. "They’re the ones in control of the daily operations of their franchisees."

As part of the settlement, the Domino's franchisees will be required to establish a grievance procedure for workers, train managers on labor law and submit reports to Schneiderman's office showing their compliance. Two franchisees who'd committed "the most egregious violations" will also have to submit to independent monitors who will make surprise visits to their stores.

Wednesday's settlement wasn't the first time Schneiderman's office reached a deal with a Domino's franchisee involving allegations of labor law violations. In December, a store owner agreed to rehire 25 employees who'd been fired after they said they were being paid below the minimum wage.

This post has been updated with a statement from Fast Food Forward.

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