Bankrupt Domino’s Franchisee in New York To Pay $1.2 Million to 61 Pizza Deliverers
From Daily Labor Report: “The district court allowed Legal Aid to include corporate Domino’s, the franchisor, as a defendant based on the workers’ allegations that corporate Domino’s was involved in training local store owners, maintaining payroll data, and establishing policies that governed the workers’ working conditions, the Legal Aid Society statement said.”
Feb. 7 — A Domino’s Pizza franchisee in New York will pay $1.2 million to 61 pizza deliverers to settle claims under the Fair Labor Standards Act for minimum wage, overtime and tip credit violations and retaliation, the Legal Aid Society announced Feb. 7 (In re DPNY, Inc.,Bankr. S.D.N.Y., 12-10935, fourth amended reorganization plan entered 12/4/13).
The U.S. Bankruptcy Court for the Southern District of New York Dec. 4 approved a reorganization plan put forth by DPNY, the franchisee in Chapter 11 bankruptcy proceedings, that includes a settlement agreement to resolve the workers’ claims.
The workers filed their class action Sept. 16, 2010, in the U.S. District Court for the Southern District of New York against DPNY, which operates four Domino’s Pizza stores, its owners and managers, and the corporate franchisor (Cano v. DPNY, Inc., S.D.N.Y., No. 2-10-7100, complaint filed 9/16/10)..
“The District Court is aware of the agreement [entered in the bankruptcy proceeding] and will dismiss the [district court] case once all payments are made,” Hollis V. Pfitsch, a Legal Aid Society staff attorney representing the deliverers, told Bloomberg BNA Feb. 7. Attorneys from Legal Aid and Shearman & Sterling LLP are representing the pizza delivery drivers.
Pfitsch said the workers will get payments ranging from $400 to $61,000 based on the number of weeks they worked at the stores. Payments began in January, she said.
The settlement agreement also requires DPNY to pay the full minimum wage to its delivery workers instead of a lower “tipped” wage that assumes the workers will receive tips that bring their hourly wage up to the minimum standard.
The workers, who used bicycles to deliver pizzas, claimed DPNY forced them to work off the clock and removed work hours from their time records. They alleged DPNY committed minimum wage, overtime and tip credit violations and retaliated against workers who complained. The workers are from several countries, including Mexico, Bangladesh and Burkina Faso, according to the Legal Aid Society.
The district court allowed Legal Aid to include corporate Domino’s, the franchisor, as a defendant based on the workers’ allegations that corporate Domino’s was involved in training local store owners, maintaining payroll data, and establishing policies that governed the workers’ working conditions, the Legal Aid Society statement said.
Domino’s, which is one of DPNY’s creditors in the bankruptcy proceeding, agreed to allow DPNY to delay paying some royalty payments and waive some of the interest owed on them. Pfitsch said Domino’s concessions on the interest payments were valued at $140,000. “It is relatively rare for a franchisor to be included in potential liability for the wage-and-hour violations of a franchisee,” she added.
“The Domino’s Pizza Corporation, which calls the shots on what happens in their franchises and makes the most profit, should take responsibility,” JoAnn Lum, director of The National Mobilization Against SweatShops, told Bloomberg BNA Feb. 7. NMASS helped put the Domino’s workers in touch with Legal Aid. “The law allows companies to hide behind their franchisees,” Lum said. “Now employers don’t fight you in court. They declare bankruptcy.”
In a Feb. 7 statement, Tim McIntyre, Domino’s vice president for communications, told Bloomberg BNA that the case involves “an independent franchise owner, who is responsible for all personnel practices within his own business.”
“Domino’s Pizza, Inc. is not contributing to the settlement in any way, as the lawsuit did not involve us,” McIntyre said. He clarified that Domino’s is “holding off” on collecting “thousands in back royalty payments” owed to Domino’s by the franchisee “so that he can use it to pay off his other creditors, including the parties involved in the settlement agreement.”
The franchisee “is paying us current royalties, and will begin to pay off his accumulated debt to us (the back royalties) beginning in about 18 months, once he’s paid off all other creditors,” McIntyre said.
Lawyers for DPNY didn’t respond to a message left Feb. 7 by Bloomberg BNA.
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