ALBANY, N.Y. (AP) — The state's attorney general on Tuesday sued Domino's Pizza Inc., affiliates and three franchisees alleging they underpaid workers based on payroll reports generated by the parent company's computer system.
"We've uncovered rampant wage violations at Domino's franchise stores, and intensive involvement by Domino's headquarters that caused many of these violations," Attorney General Eric Schneiderman said. "At some point, a company has to take responsibility for its actions and for its workers' well-being."
Schneiderman said the company knew for years that its PULSE system undercalculated gross wages while encouraging franchisees to use it.
The suit in state Supreme Court in Manhatttan alleges the three franchises and the company, as joint employers, underpaid workers at least $565,000 at 10 New York stores. It also seeks to determine full restitution owed to workers, a court finding that Domino's defrauded its franchisees and violated state law, and a monitor to ensure future compliance.
The attorney general's office has settled cases with 12 other Domino's franchisees, who collectively own 61 stores and have agreed to pay about $1.5 million. The company has 136 franchisee-owned stores in New York, along with 54 owned by Domino's itself.
The Ann Arbor, Michigan-based company called Schneiderman's lawsuit disappointing, saying it "disregards the nature of franchising and demeans the role of small business owners." The company said it has worked with his office for three years trying to help franchises comply with New York's complex wage laws.
"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," company spokesman Tim McIntyre said.
In a March letter to Terri Gerstein, chief of Schneiderman's Labor Bureau, a lawyer for the company wrote that its standard franchise agreement requires complying with all laws and regulations and that the company agreed that every employee not paid the legal wage "should be made whole." The company would be willing to fund the cost of a monitor and franchise management training on complying with New York's wage and hour laws, attorney Eric Corngold wrote.