Is Domino’s Responsible for Wage Theft by its Franchisees?

Is Domino’s Responsible for Wage Theft by its Franchisees?

New York Attorney General Eric Schneiderman believes so, and is suing the pizza chain, the Wall Street Journal reports, alleging that the company “mandated that [franchisees] use a payroll software system that under-calculated gross wages and failed to fix it when problems were brought to their attention”:

Mr. Schneiderman claims the company is liable for the alleged underpayment because it’s a joint employer with its franchisees, an argument at the heart of a broader industry fight over who’s responsible for the worker-related actions of franchisees. … The lawsuit against Domino’s and three of its franchisees, filed in state Supreme Court in Manhattan on Monday, claims that the company’s faulty payroll system led to workers being underpaid a total of at least $565,000 for 10 of its stores. Mr. Schneiderman says he is seeking that amount for employees but wants a full accounting of any wages owed.

Domino’s spokesman Tim McIntyre said Tuesday that the pizza chain’s franchisees, not the company, are solely responsible for the hiring, firing, and payment of their own employees but that the company had been working for more than three years to help its franchisees understand wage and hour laws. Regulators say they’re trying to keep up with labor market changes that are resulting in more fractured work arrangements that can leave employees and the government unsure about who’s responsible when a grievance arises.

The New York Times explains how this case is different than previous lawsuits against Domino’s franchisees:

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