Papa John’s Franchisee Hit with $2 Million New York Labor Law Judgment

New York, NYA New York judge and the Attorney General of the state have both signaled through their actions that New York labor law will not be allowed to flounder at the hands of employers who are alleged to play unfairly in the employment sandbox. To that end, a Papa John’s franchisee has been hit with a $2 million judgment for allegedly underpaying employees.

Attorney General of New York Eric T. Schneiderman has been cracking down on fast food chains for alleged abuse against their employees. Specifically, the judgment involving Papa John’s International Inc. franchisee Ronald Johnson was based on a New York employment civil lawsuit filed in October of last year.

According to court records and the results of an investigation, it is alleged that the franchisee rounded down work hours for nearly 400 employees. Other infractions alleged to have occurred included delivery personnel, who were required to perform duties - such as kitchen work - that would not allow them to earn tips.

Minimum wage for tipped workers is $5.65 per hour. For most everyone else it’s $7.25 per hour. However, it is alleged that some Papa John’s workers earned as little as $5 per hour as the result of their allegedly shorted paychecks.

Johnson, the defendant, is reported as owning five Papa John’s outlets through his company, New Majority Holdings LLC. It was reported that Johnson attempted to represent himself in the New York employment law civil action. The $2 million judgment against Johnson was issued by the court, reportedly due to his decision to represent himself. Johnson has since hired an attorney, who vows to appeal the judgment and fight it “vigorously.”

The investigation resulted from complaints that came into the Office of the New York Attorney General by New York employees in May of 2013 - specifically, from delivery workers. After the Attorney General’s office subpoenaed payroll documents from the franchisee, as well as Papa John’s and the franchisee’s payroll company, it was determined that the New York employment law violations had been going on since October 2008 - or so it is alleged.

New Majority Holdings allegedly required delivery employees to purchase their own bikes, locks and safety equipment, which could cost up to $500 per employee each year. New York labor law requires employers to provide that gear to their workers.

“We will continue to investigate wage and hour violations in the fast food industry,” Schneiderman said in a statement announcing the March 3rd judgment. “I call on all fast food franchisors, including Papa John’s, to take steps necessary to ensure that their workers - the backbone of their business - are treated fairly and paid the wages the law requires.”

The case is People of the State of New York v. New Majority Holdings LLC et al., index number 452487/2014, in the Supreme Court of the State of New York, County of New York.