New York Attorney General Eric Schneiderman has sued Domino”™s Pizza, claiming locations of the international pizza franchise in the state systematically undercalculated employees”™ gross wages.
Schneiderman”™s lawsuit, filed May 23 in state Supreme Court, alleges that three Domino”™s franchisees underpaid workers by at least $565,000 at 10 stores in New York, including one in Westchester. The suit names the three franchisees, as well as the Domino”™s corporation itself.
The three franchisees named in the lawsuit are Anthony Maestri, Schueb Ahmed and Matthew Denman. Ahmed owns and operates two Domino”™s locations in Nassau and New York counties, while Denman runs two in Montgomery County, according to the suit.
Maestri owns and operates three Domino”™s locations in New York City, but previously owned locations in Ossining, Mount Kisco and Cortlandt Manor, according to the suit.
A multiyear investigation by the attorney general”™s office found that Domino”™s allegedly urged franchisees to use payroll reports from the company”™s system that the corporation knew undercalculated employee’s gross wages. Multiple updates were made to Domino’s wage software, but the flaws that led to underpayment of wages were deemed “low priority,” Schneiderman said.
Schneiderman is suing Domino”™s as a joint employer along with the franchisees. His office claims that the micromanagement of franchisees by Domino”™s headquarters ”“ including hiring and firing decisions and electronic performance reviews ”“ makes the corporation responsible for the alleged underpayment of employees as well.
“At some point, a company has to take responsibility for its actions and for its workers”™ well-being,” Schneiderman said. “We”™ve found rampant wage violations at Domino”™s franchise stores. And, as our suit alleges, we”™ve discovered that Domino”™s headquarters was intensely involved in store operations, and even caused many of these violations.”
The lawsuit also pursues fraud and franchise law claims against Domino’s, claiming the company knowingly sold a flawed software product to franchisees and did not remedy its problems.
The allegations at the 10 locations mentioned in the suit vary, but include subminimum wages, failure to pay overtime, abuse of tip credit and failure to fully reimburse employees for delivery expenses.
In a statement, Domino”™s said its corporate offices had been working with the attorney general”™s office for three years to help franchisees “understand and comply with some of the many complex wage and hour laws,” including possibly funding a third-party payment system.
“We were disappointed to learn that the attorney general chose to file a lawsuit that disregards the nature of franchising and demeans the role of small-business owners instead of focusing on solutions that could have actually helped the individuals those small businesses employ,” the statement said.
Domino”™s added it will continue to take steps to help franchisees comply with wage and hour laws and looks forward to responding to the allegations in court.
Domino”™s is the world”™s second-largest pizza chain, following leader Pizza Hut, and the largest pizza delivery chain in the U.S. The company has 136 franchisee-owned stores in New York, with another 54 owned by Domino”™s itself. Schneiderman”™s office has settled cases in the past with 12 Domino’s franchisees, who have agreed to pay $1.5 million to date.
The investigation uncovered documents produced by Domino”™s that show 78 percent of New York franchisees over a two-year period listed rates for at least some employees below the required minimum wage, Schneiderman said, and 86 percent listed rates below the required overtime rate.
