New York Attorney General Eric Schneiderman filed a lawsuit against Domino's Pizza Tuesday alleging the pizza delivery company underpaid workers in at least 10 New York franchise stores.
The country's largest pizza delivery company and three of its franchisees underpaid workers at least $565,000, according to the lawsuit, which alleged the parent company is responsible for the lost wages.
The lawsuit asserts that the Domino's should be legally responsible for the lost wages and deemed a joint employer of workers at the 10 franchise locations because the parent company was active in hiring, firing, and disciplining employees.
"Dominos does not only control how many pepperonis are on each pizza," Schneiderman said at a press conference Tuesday. "Domino's exercises control over all key aspects of employee relationships."
Following a four-year investigation, Schneiderman asserted that Domino's required its franchises to use a computer system called PULSE to conduct payroll reports and receipts, even though Domino's knew for years that PULSE under-calculated wages.
While Domino's made several changes and updates to PULSE each year, the company never fixed the flaws that caused underpayments to employees, he said.
According to Schneiderman, internal Domino's emails and sworn testimonies show that Domino's "unquestionably knew about the flaw in the system" as far back as 2007.
"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," a Domino's spokesperson said in a statement. "We believe that every employee deserves to be treated fairly and paid what they are entitled to under the law."
Schneiderman's office has already settled cases with 12 Domino's franchisees who own 61 stores and have agreed to pay approximately $1.5 million.
The lawsuit seeks an assessment to determine the full amount of restitution owed to workers, a finding that Domino's defrauded its franchises and violated state franchise laws, and for the court to impose a monitor to ensure future compliance.
"At some point, a company has to take responsibility for its actions and for its workers' well-being," Schneiderman said.