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Half Pepperoni, Half a Million: Nine Papa John’s Franchises Accept Massive Wage Theft Settlement

Pretty much everyone's sentiments, exactly.

Pretty much everyone’s sentiments, exactly.

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A settlement has been reached between the state of New York and four former and current owners of nine Papa John’s franchises which will result in 250 employees sharing $500,000 in back wages.  The wage theft occurred at Papa John’s locations in Brooklyn, Queens, and the Bronx and involved unpaid overtime and workers being forced to work off-the-clock.  

In a statement announcing the settlement, New York Attorney General Eric Schneiderman said:

“Once again, we’ve found Papa John’s franchises in New York that are ripping off their workers and violating critical state and federal laws. Once again, I call on Papa John’s and other fast food companies to step up and stop the widespread lawlessness plaguing your businesses and harming the workers who make and deliver your food.”

As part of the settlement the investigated franchises admitted the following violations:

• Some stores failed to pay employees the minimum wage and overtime wages required under the federal Fair Labor Standards Act and state law.
• Some stores violated a state requirement that employers must pay an additional hour at minimum wage when employees’ daily shifts are longer than 10 hours.
• Some stores failed to provide adequate uniforms for employees for the number of shifts in a week, and also failed to pay the required uniform laundry allowance.

Dr. David Weil, Administrator for the Wage and Hour Division of the U.S. Department of Labor, said:

“Employers who underpay their employees not only deprive workers of the funds needed to buy their food, pay their rent or attend to other necessities, they undercut those law-abiding employers who pay their employees properly in the first place. Although franchising is a legitimate business model, it can also be associated with practices that lead to violations of labor standards. Franchisees must understand that they are not exempt from the law.

The settlement followed the arrest of Abdul Jamil Khokhar, owner of nine Papa John’s franchises. He could face up to two months in jail for violating the state’s minimum wage and overtime laws.  

Schneiderman’s office has been on the forefront of fighting wage theft, although current law dictates only short jail sentences associated with major wage theft.  

Wage theft is gaining national attention but remains a major factor in a stagnant economic recovery.  A 2013 report from Fast Food forward found that 84 percent of fast food workers and 100 percent of delivery drivers in New York City had experienced wage theft.  A 2009 study by the Economic Policy Institute found that wage theft costs the average low-wage worker $2,634 a year.  Using that figure, it is estimated that wage theft costs American workers more than $50 billion annually.    

Given that the wage theft was committed by franchise owners, Papa John’s was not part of the settlement.  The recent NLRB decision in Browning-Ferris, however, could impact this type of behavior in the future by redefining Papa John’s as a “joint employer” that can be held accountable for the actions of its contractors.  


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