On May 24th, 2016, New York Attorney General, Eric Schneiderman, filed a lawsuit against Domino’s and its franchisees for systemic wage theft.
The essense of the AG’s claim is that Domino’s paid workers sub-minimum wages and less overtime than workers were entitled to, as well as abuse of the tip credit. The suit also alleges that workers were not reimbursed for car or bicycle expenses.
According to the AG, all franchisees are required to use a payroll management software program called, “PULSE,” which calculates employees’ wages. Interestingly, the AG views Domino’s as a joint employer with franchisees because of the level of involvement the franchisor has in the employment practices of the francisees.
Here is a link to the AG’s webpage: http://www.ag.ny.gov/press-release/ag-schneiderman-announces-lawsuit-seeking-hold-dominos-and-its-franchisees-liable
Last week, the White House issued a directive through the Department of Labor mandating that workers earning up to $47,476 per year must be eligible to receive time-and-a-half for overtime. Prior to the directive, the 2004 threshold of $23,660 was in place. Millions of workers will be affected by the change.
What does this mean for EPL insurance? Insurers will continue to scrutinize the availability of wage & hour defense coverage as well as the exposure of franchisors to the employment practices of franchisee operations.
For franchisees, the imperative is to pay attention to franchisor practices, as the franchisor’s practices can bring liability to the franchisee.
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