In a recent New York Times article, a Domino’s franchise settled its lawsuit with its bicycle delivery employees for $1.28 million. The settlement will split the money among 61 delivery employees, based on time they were employed at any one of the franchise’s four locations. However, whether the employees will see most, if any, of that settlement money will depend on what money is available once the franchise’s bankruptcy is resolved.
The Story
In the lawsuit, the employees claimed the franchise violated numerous wage laws, including: improper minimum wage, not providing lunch breaks, and not paying for uniforms or overtime. Employees were allegedly told they would work more than 40 hours, but would only be paid for 40 hours. This practice supposedly helped the managers’ bonuses. Employees in the lawsuit claimed not only were they denied overtime, but their paychecks also reported fewer hours than they actually worked even when they did not work more than 40 hours. Additionally, one of the two filing employees claimed he was fired in 2007, immediately after complaining to his manager about his wages. Another employee, who worked for the franchise from 2005 until 2009, knew the franchise was underpaying. Unfortunately, he, like many other delivery people, knew about the wage theft, but did not feel there were any other options except to continue working.
According to the article, the improper handling of wages was an ongoing problem dating back to at least 2004. Two employees filed the lawsuit that languished for two years with New York’s Department of Labor before the Legal Aid Society stepped in. Surprisingly, in the middle of the lawsuit, the franchise filed for bankruptcy. When the franchise filed for bankruptcy, the employees succeeded in including Domino’s in the lawsuit. However, because the franchise owes Domino’s more than what the bankruptcy court ordered Domino’s to contribute to the settlement, Domino’s will not be providing any additional funds. On the other hand, Domino’s is not seeking the money the franchise owes until after employees are paid.
Employer Bankruptcy
There are two forms of bankruptcy for businesses. In one form, Chapter 11, the business continues to function, but the courts, or someone they appoint, will oversee the business’ finances and reorganization efforts. In the second form, Chapter 7, the business closes down and sells all of its assets to pay off creditors. In order to enter bankruptcy, businesses generally are already in a situation of not having sufficient finances to cover all of their debts. In this case, the franchise did not believe it had enough funds to cover the liability associated with losing the lawsuit. Since Domino’s is not collecting the money it is owed, it is likely the franchise is winding down. Fortunately, any employee owed wages, and those included in the settlement, will likely be some of the first creditors to be paid, assuming there are enough funds.
If you have concerns about your wages or the wages you should be paying your employees, contacting an HKM employment law attorney can help.
