The attorney general of New York filed a lawsuit today against Domino’s and three of its franchisees for allegedly using the chain’s POS system to undercalculate employees’ wages.
The alleged infractions occurred at 10 franchised stores. Domino’s was included in the suit as a joint employer of the underpaid staffers, an assessment certain to stoke controversy over franchisors’ legal obligations to franchisees’ employees. Attorney General Eric Schneiderman said headquarters knew the chain's POS system under-calculated wages yet continued to recommend its use by franchisees.
Domino’s said in a statement that has worked with the attorney general’s office for three years to ensure franchisees comply with New York's complicated wage and hour regulations.
"We had even discussed funding a third-party system to make sure that franchisees did not inadvertently fail to pay their employees everything those employees are entitled to receive," read the statement.
It characterized Domino’s designation as a joint employer as an assault on the very nature of franchising and a move that demeans franchisees by suggesting they don’t run their own businesses.
"We will continue to take those steps which we are permitted to take to foster our franchisees’ compliance with the wage and hour laws, not because we are obligated to do so, but because we think it’s the right thing to do," the statement continued. "We look forward to the opportunity to respond to the Attorney General’s allegations in court."
The suit seeks at least $565,000 in unpaid wages to employees and access to the defendants’ payment processes to avert any further violations.
Schneiderman had taken legal action against 12 franchisees before filing today’s suit. Those prior cases were settled out of court.
The attorney general has also brought legal actions against Papa John’s franchisees for violation of wage and hour laws. The chain's franchisor was not regarded as a joint employer in those year-ago moves.