The state's attorney general has sued Domino's Pizza Inc, affiliates and three franchisees alleging they underpaid workers based on payroll reports generated by the parent company's computer system.
"We've uncovered rampant wage violations at Domino's franchise stores, and intensive involvement by Domino's headquarters that caused many of these violations," Attorney General Eric Schneiderman said today.
"At some point, a company has to take responsibility for its actions and for its workers' well-being."
Schneiderman said the company knew since at least 2007 that its PULSE system's payroll software undercalculated gross wages while still encouraging franchisees to use it.
The suit filed yesterday night in state Supreme Court in Manhattan alleges the three franchises and the company, as joint employers, underpaid workers at least USD 565,000 at 10 New York stores.
It also seeks to determine full restitution owed to workers, a court finding that Domino's defrauded its franchisees and violated state law, and a monitor to ensure future compliance.
The Ann Arbor, Michigan-based company called Schneiderman's lawsuit disappointing, saying it "disregards the nature of franchising and demeans the role of small business owners."
The company said it has worked with his office for three years trying to help franchises comply with New York's complex wage laws.
Domino's is the largest pizza delivery company in the US and gets most of its sales and profits USD 272.8 million in fiscal 2015 revenues through its franchise stores, the lawsuit said.
"Yet, while the employees who deliver pizza from Domino's franchise stores are the linchpin of Domino's business, Domino's and the franchisee respondents systematically failed to pay delivery workers all of their hard-earned and lawfully owed wages."
Violations included failure to pay delivery workers the legal minimum wage and overtime rates and adequately reimburse their expenses, the suit alleges.
In a new twist in the attorney general's wage theft cases, which have returned USD 26 million to nearly 20,000 workers since 2011, it says the franchisor is liable as a joint employer "because it exercised a high level of control over employee conditions at its franchise stores and because of its role in causing the wage violations at issue.
