Domino’s Pizza Inc. and three New York area franchisees, including one in Valley Stream, are being accused by the state of using a flawed software system that underpaid many employees.
The lawsuit, which is being announced Tuesday by state attorney general Eric T. Schneiderman, is unusual in that it claims Michigan-based franchiser Domino’s employs the workers jointly with the three franchisees and therefore is jointly accountable for the allegedly short paychecks.
The case resembles a long-running legal battle over a contention by the National Labor Relations Board’s general counsel that fast-food giant McDonald’s Corp. could be jointly liable with its franchisees for unfair labor practices.
“At some point, a company has to take responsibility for its actions and for its workers’ well-being,” Schneiderman said in a statement about the new lawsuit. “As alleged in our complaint, we’ve uncovered rampant wage violations at Domino’s franchise stores, and intensive involvement by Domino’s headquarters that caused many of these violations.”
The Valley Stream franchisee, at 475 West Merrick Rd., was identified by the attorney general’s office as Schueb Ahmed, who also operates a Domino’s in Manhattan. He and the two other franchisees own a total of 10 stores.
Ahmed’s attorney, Martin Silver of Hauppauge, said there was no intent to cheat any workers. “Any underpayments, if any, were the result of a misunderstanding by [Ahmed’s company] and its accountants of the proper way to calculate certain salary with regard to tips and overtime.”
A spokesman for Domino’s, Tim McIntyre, said in an email that the company contends its franchisees have sole responsibility for paying their employees. He also said that Domino’s offered proposals over the past three years to allay the attorney general’s concerns, none of which were accepted.
“We were disappointed to learn that the attorney general chose to file a lawsuit that disregards the nature of franchising and demeans the role of small business owners instead of focusing on solutions that could have actually helped the individuals those small businesses employ,” the spokesman said.
Schneiderman’s suit, filed Monday night in State Supreme Court in Manhattan, claims workers at the 10 locations were shortchanged by a total of $565,000.
Schneiderman said his office has uncovered internal Domino’s documents showing that, over a two-year period, 78 percent of New York franchisees paid some employees below minimum wage and 85 percent underpaid for overtime.
The news release said that workers were underpaid because Domino’s required its franchisees to use a software system that systematically under-calculated workers’ wages.