Lawsuit Alleges That Papa John’s Franchisee New Majority Holdings LLC And Owner Ronald Johnson Failed To Pay The Minimum Wage To More Than 400 Delivery Workers, Shaved Hours From Their Pay, And Committed Other Labor Law Violations

Schneiderman: We Will Enforce New York Labor Law In The Fast Food Industry

Last week,Attorney General Eric T. Schneiderman filed a lawsuit in New York County Supreme Court against Papa John’s pizza franchisee New Majority Holdings, LLC and its owner, Ronald Johnson, for significantly underpaying delivery workers in violation of State Labor Law. The violations include failing to pay delivery workers the minimum wage, shaving hours from their pay, and requiring them to pay for bicycles and safety equipment used to do their jobs. The lawsuit seeks more than $2 million in restitution, damages, and interest for more than 400 delivery workers who were underpaid. The lawsuit also seeks to halt the illegal business practices that are ongoing.

“Nobody who works 40 hours a week should have to live in poverty,” Attorney General Schneiderman said. “Like every other business in New York, fast-food employers must follow the law. My office will combat wage theft whenever and wherever we see it in order to protect the rights of hardworking New Yorkers, including pizza delivery workers and others who toil at fast-food restaurants.”

The lawsuit stems from a year-long investigation by the Attorney General's Labor Bureau into New Majority’s pay practices. As described in court papers, the evidence gathered over the course of the investigation, including Mr. Johnson’s testimony and the company’s time and payroll records, showed that the company:

• Brazenly shaved work hours, rounding down pizza delivery workers’ time for each pay period to the nearest whole hour and not paying them for the remainder;
• Paid pizza delivery workers as little as $5 an hour, far less than the $7.25-per-hour minimum wage that was required for most of the time period covered by the lawsuit. This $5-per-hour rate was below even the $5.65 rate available for some tipped service employees, when the employer has fulfilled the requirements for claiming a tip credit;
• Regularly failed to pay proper overtime to delivery workers who worked more than 40 hours in one week, by basing overtime on an unlawfully low hourly rate, and calculating overtime incorrectly in several ways;
• Required workers to purchase and maintain all bicycle delivery-related equipment that New York City law requires an employer to provide, such as bicycles, helmets, locks, chains, and safety gear, at a cost of at least $500 per worker each year;
• Never paid delivery workers “spread of hours” pay, an additional hour of pay required by the Labor Law for shifts in which the interval between the start and end time was longer than 10 hours;
• Never compensated workers as required by the Labor Law for what is known as “call-in pay,” i.e., compensation for being called in to work and then being sent home early;
• Failed to provide delivery workers with required written notice of their pay rates and other employment information; and
• Failed to maintain adequate records of wages and hours as required by the Labor Law.

The lawsuit notes that the majority of evidence in the case arises from the employer’s own admissions and documents. The lawsuit also alleges that in addition to the corporation, Mr. Johnson is individually liable for damages owed to delivery workers, because he was their employer. The Attorney General is seeking over $1 million in unpaid wage restitution for over 400 delivery workers, as well as liquidated damages and interest, bringing the total owed to over $2 million. The Attorney General is also seeking injunctive relief, to ensure that the company properly pays delivery workers going forward and provides them with written notice of their terms and conditions of employment, as the law requires.

The lawsuit is the first to come out of ongoing investigations of numerous fast-food employers by the Attorney General’s Labor Bureau for labor law violations.

The Attorney General has also reached several settlements with fast-food franchises. In March 2013, the Attorney General secured a settlement with six Domino’s Pizza franchises, which collectively owned 23 restaurants, for unpaid minimum wages, overtime, and vehicle expense reimbursements for delivery drivers. In a separate matter in March 2013, the Attorney General secured a settlement of almost $500,000 for mostly minimum-wage employees of McDonald’s franchises operated by the Cisneros Group and its owner Richard Cisneros. In December 2013, the Attorney General obtained reinstatement for 25 workers at a Domino’s pizza franchise located in Washington Heights, in New York City.

New Majority’s Papa John’s pizza restaurants, all in Manhattan, are located at 703 Lenox Ave, Suite 705, New York, NY 10039-4501, 301 Cathedral Parkway, New York, NY 10026, 2119 1st Avenue, New York, NY 10029, 3477 Broadway, New York, NY 10031, and 329 Lenox Avenue, New York, NY 10027 (now closed).

"When I worked for Papa John's, I was cheated of my hours, and treated as less than human," said Darrell Roper, 51, a former New Majority Holdings employee. "Unfortunately that's the reality for so many delivery workers, but I know that today, we're on our way to getting justice."

“Fast-food workers all across the city and country are organizing for higher pay and union rights,” said Kendall Fells, organizing director of Fast Food Forward. “This suit shows why their campaign is so important. And it shows that Attorney General Schneiderman is serious about holding fast-food companies accountable for wage theft. Workers who make the minimum wage, or the even lower tipped minimum, cannot afford to have their employers stealing from their paychecks. The suit is a clear signal that unscrupulous employers will not be tolerated. And it is the latest reminder that giant fast-food companies like Papa John's must ensure that its franchise holders abide by the law and treat workers fairly.”

The case is being handled by Assistant Attorney General Elizabeth Wagoner and Section Chief Andrew Elmore in the Attorney General’s Labor Bureau, which is led by Bureau Chief Terri Gerstein. Executive Deputy Attorney General for Social Justice is Alvin Bragg.