Operations

Federal court orders a Subway franchisee to close or sell their restaurants

The judge awarded nearly $1 million in back pay and damages to employees of a Bay Area 14-unit Subway operator after finding they issued bad checks, kept tips and violated child labor laws.
Subway department of labor
The U.S. Department of Labor wants a 14-unit Subway franchisee to close or sell their restaurants over wage and hour law violations. | Photo: Shutterstock.

A federal court late last week ordered a 14-unit Subway franchisee to either close or sell their stores by Nov. 27 after finding the operator violated numerous federal child labor laws and then threatened workers who raised concerns. 

The court also said that the franchisee, John Michael Meza and his wife Jessica Meza, cannot own a Subway or another food franchise for three years.

In addition, the court ordered that the operator pay nearly $1 million in back pay and damages after federal regulators found that the Mezas and an associate, Hamza Ayesh, failed to pay employees regularly, had 14-year-olds use damaged equipment, issued bad checks and kept tips.

Investigators from the U.S. Department of Labor (DOL) also found that the Mezas tried to coerce employees into not cooperating with the investigation and threatened children who raised concerns.

“Thanks to some very brave young people who stood up to their employers’ exploitation and attempts to intimidate them, the Department of Labor and a federal court are holding these business owners accountable,” Ruben Rosalez, DOL’s wage and hour regional administrator in San Francisco, said in a statement.

The department also took a shot at Subway itself for not taking action against the operator. The agency said in its statement announcing the decision that Subway notified the Mezas in June that it knew of the litigation and that the operator continued to violate federal law yet let them continue to operate restaurants.

“This case sends a clear message to others who—despite ongoing litigation and a preliminary injunction—continue their wage theft that the department will use the tools at its disposal to end their illegal practices,” Marc Pilotin, DOL’s regional solicitor of labor in San Francisco, said in a statement.

Subway in a statement said it took “immediate steps” to remove the operator from the system. “We take these matters very seriously and don’t condone this behavior,” the sandwich giant said in an emailed statement. “Immediate steps were taken to remove the franchisee from the system when we learned of the DOL investigation. Our restaurants are independently owned and operated, and franchisees are required to follow federal, state and local laws.”

This is the second time in the past two months that a regulator has ordered the closure of restaurants over wage and hour law violations. In August, New Jersey labor regulators ordered the temporary closure of 27 Boston Market locations there over unpaid wages, later lifting that order after workers received more than $600,000 in back pay.

The DOL described the order to have restaurants closed or sold as “rare.”

In this instance, the order came down from federal regulators clearly frustrated by what they see as ongoing violations on the part of the restaurant owner.

The Mezas operate 14 locations in the Bay area, including a trio in Napa, Calif., and another three in Petaluma, Calif.

The DOL had sued the Mezas in April, alleging that the Mezas had 14- and 15-year-olds operate ovens, toasters and cardboard balers and had them work excessive hours. The agency said the employees suffered from severe burns. One 15-year-old employee injured his foot when he fell from a ladder he was instructed to climb to replace a bucket catching water leaking from the bathroom and air conditioning system.

The employees were also instructed to use industrial meat slicers the locations added in April.

The DOL also said that workers were routinely required to work over 40 hours a week without overtime and issued bad checks without reimbursing workers for the fees they were charged when paychecks bounced.

The agency said that John Michael Meza called at least one worker and told them not to speak with investigators, and also said that Ayesh threatened file a false police report against two 15-year-old employees who requested their unpaid wages.

The order requires that the Mezas deposit any proceeds from the sale of their businesses with the DOL’s wage and hour division, if the restaurants get sold.

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