Prosecutors Say Domino’s Underpaid Workers

MANHATTAN (CN) — Domino's screwed its pizza makers and delivery workers out of wages by hiding behind a payroll computer system it knew was faulty, New York State's top prosecutor claims in court.

New York Attorney General Eric T. Schneiderman filed a triplet of court documents in Manhattan Supreme Court on Monday with accusations that the nation's largest pizza delivery chain underpaid employees through its computer system to the tune of at least $500,000 at 10 stores in a state famous for its pies.

"We've found rampant wage violations at Domino's franchise stores," Schneiderman said in a statement. "We've discovered that Domino's headquarters was intensely involved in store operations, and even caused many of these violations."

A "multi-year investigation" that began in 2011 led to the discovery that the pizza company encouraged franchisees to use its payroll system known as PULSE, knowing that it would under-calculate wages, prosecutors claim.

The state's top legal eagle says even though updates were frequently made to the system, the company "decided not to fix the flaws that caused underpayments to workers, deeming it a 'low priority.'"

The pizza giant also allegedly micromanaged its franchisees and pushed against attempts to unionize among pizza makers and deliverers.

"Under these circumstances, New York law — as well as basic human decency — holds Domino's responsible for the alleged mistreatment of the workers who make and deliver the company's pizza," Schneiderman said. "Domino's can, and must, fix this problem."

The attorney general noted that the company has already settled at least 12 different cases stemming from 61 stores nationwide to the tune of $1.5 million.

He says that during his office's two-year investigation, he discovered that 78 percent of New York's Domino's franchisees didn't pay workers at least minimum wage, and that 86 percent of its workers weren't paid overtime.

Minimum wage is a hot topic in New York these days, after Gov. Andrew Cuomo signed a bill last month to increase base-pay to at least $15 an hour.

Also at issue within the franchises is micromanagement. Schneiderman says corporate told its franchisees who to fire, and even dictated what employers could wear, right down to the diameter of their earrings, the color of their undershirts and the visibility of their tattoos.

Three men were named in the complaint: Anthony Maestri, who owns and operates three Domino's chains in New York; Schueb Ahmed, who runs two stores, one in Long Island's Nassau County and another in Manhattan; and Matthew Denman, who runs two stores in Montgomery County, N.Y.

Schneiderman also notes that, since 2011, his office has earned more than $26 million for over 20,000 workers who were "cheated" out of pay. Such cases include settlements with Domino's competitor, Papa John's franchisees. A Papa John's franchisee owner in the Bronx even got jail time for it, he noted.

Domino's spokeswoman Jenny Fouracre said in a statement that 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."

"While those franchisees are solely responsible for the hiring, firing, and payment of their own employees, we had been working with the attorney general's office for quite some time — more than three years — to see what we could do to help our franchisees understand and comply with some of the many complex wage and hour laws that apply to their employment decisions," she said.

Fouracre shared a March 18 letter sent to Schneiderman's office, which she said outlined "the good faith efforts we made in trying to resolve this."

"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," Fouracre said.

New York's court documents were filed by Assistant Attorney General Lawrence Reina. In addition to a petition, the documents include a supporting affirmation and memorandum of law.

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