Employers find various ways to cheat employees out of overtime. A company can be guilty of overtime violations when they use managerial job descriptions to make people ineligible for overtime. Another tactic employers often use is to create a subterfuge to make it look like an employee is working fewer hours than they actually are.

Generally these actions are undertaken as a cost-cutting exercise that seems harmless at first, but in the long run they can end up costing the company much more when it is ordered to pay back the wages as in the case of Papa John’s franchisee, Emstar Pizza, Inc., in New York City.

Unfair Practice #1: Splitting Time and Rounding

Emstar Pizza, Inc. owns seven Papa John’s locations in Queens and Brooklyn. They were recently ordered to pay $789,507.06 in unpaid wages and other costs. In a statement issued by the New York State’s attorney general Eric Schneiderman their violations were described as follows: “This Papa John’s franchisee brazenly violated the law, shaving employees’ hours and avoiding paying overtime by various means, including giving managerial sounding titles such as ‘head driver.’”

This decision came after an earlier probe by the office into unfair overtime practices. The franchise would often split employees’ work weeks between stores, 20 hours at one location, 30 hours at another. Since they were technically different companies, at least in the way they reported hours, violations went unchecked initially. It was also found that the franchisee owner rounded down to the nearest whole hour on employees’ paychecks.

Hundreds of employees were ripped off in this way over a six-year period. According to Mr. Schneiderman, the owner of Emstar Pizza, Inc., also tried to sell the stores to get out from under the trouble with the state.

The New York Attorney General’s Office is considering going after Papa John’s corporate entity due to its franchisee’s egregious behavior.

Is a Corporate Entity Guilty of a Franchisee’s Mismanagement?

It’s difficult to say. On the one hand, all Papa John’s franchisees must send employee shift records to corporate headquarters so the information was available to the parent company.

In the past, blaming a parent company for franchisee’s mismanagement was without precedent but the National Labor Relations Board in December of 2014, held McDonald’s Corp. responsible for discrimination at one of its franchises in Virginia.

Whether Schneiderman and the State of New York will use that precedent to hold Papa John’s corporate accountable is still being debated but the second violation certainly makes it more plausible.

If you believe your company owes you unpaid wages, your job position is wrongly classified, or you question your employer’s overtime calculations, consult an employment attorney who can help you receive what’s owed to you. Contact Wenzel Fenton Cabassa, P.A., today for a free consultation.

Please Note: At the time this article was written, the information contained within it was current based on the prevailing law at the time. Laws and precedents are subject to change, so this information may not be up to date. Always speak with a law firm regarding any legal situation to get the most current information available.