Eric Schneiderman for Attorney General

N.Y. attorney general accuses Domino’s Pizza of cheating workers out of $565G in wages

May 27, 2016

As published in the NY Daily News on May 24, 2016.

ALBANY — Domino’s Pizza wasn’t just delivering pizza but also substandard wages to hundreds of its workers, state Attorney General Eric Schneiderman charged in a lawsuit Tuesday.

Schneiderman accused the pizza behemoth and three of its franchisees of cheating workers at 10 stores in New York out of at least $565,000 in wages over the past four years. The lawsuit marks the first time Schneiderman has targeted a corporate franchisor of being complicit in wage theft.

“At some point, a company has to take responsibility for its actions and for its workers’ well-being,” Schneiderman said.

“As alleged in our complaint, we’ve uncovered rampant wage violations at Domino’s franchise stores, and intensive involvement by Domino’s headquarters that caused many of these violations.”

According to Schneiderman’s lawsuit, Domino’s, the world’s second-largest pizza restaurant chain, required its franchisees to use a flawed payroll system known as “PULSE” that systematically under-calculated workers’ wages. The company continued to mandate the PULSE system’s use even after it became aware of its flaws.

Domino’s spokesman Tim McIntyre said Schneiderman’s lawsuit “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.”

McIntyre said the company had been working with Schneiderman’s office for more than three years on methods — including third party monitoring — to ensure that franchisees complied with the law.

“It’s unfortunate that these steps were not enough, and that the attorney general now wants the company to take steps that would not only deprive our independent business owners of the opportunity to make their own employment decisions, but could impact the viability of the franchise model, the many opportunities it offers to those looking to start their own businesses, and the millions of jobs those franchised businesses create,” he said.

According to Schneiderman’s lawsuit, the PULSE system used the wrong formula to calculate wages owed to tipped delivery workers, failed to aggregate hours worked by employees at different franchise locations, and could not separately track hours that workers spend doing tipped and non-tipped work, which pay different wages.

The system also did not account for a state Labor Department provision that requires employers to pay one additional hour on each day when the length of an employee’s total workday exceeds 10 hours.

In addition to the corporate parent, Schneiderman’s lawsuit also targeted franchise owners Anthony Maestri, Schueb Ahmed and Matthew Denman, who owned stores in the city as well as Nassau and Montgomery counties.

The lawsuit is the latest move in an ongoing probe by Schneiderman of Domino’s operations in New York.

So far, the attorney general had previously reached agreements with 12 franchise owners operating 61 restaurants in New York, resulting in $1.5 million in restitution for thousands of workers.