New York Attorney General Eric Schneiderman filed a lawsuit Tuesday against Domino’s corporate for the wage policies of independently owned pizza shops within its franchise.
Schneiderman alleges in his lawsuit that ten Domino’s stores in his state underpaid their employees. His lawsuit goes beyond the stores in question and seeks to make Domino’s corporate responsible as well. Franchises typically consists of multiple businesses that contract with a corporation in order to sell its products, while remaining independently owned.
“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,” Domino’s Spokesman Tim McIntyre told The Daily Caller News Foundation. “We believe that every employee deserves to be treated fairly and paid what they are entitled.”
The federal government can make a corporation responsible for the independent businesses it contracts with by declaring them a joint-employer. A franchisor typically has to assert direct control over the wage and hiring practices of the businesses it contracts, with which Domino’s maintains it didn’t do. Domino’s officials noted the corporation merely worked with the attorney general to encourage proper wage policies.
“Attorney General now wants the company to take steps that would not only deprive our independent business owners of the opportunity to make their own employment decisions,” McIntyre said. “[It] could impact the viability of the franchise model, the many opportunities it offers to those looking to start their own businesses.”
McIntyre warns anything beyond guidance would undermine what makes the ten stores independent. The attorney general lawsuit mirrors efforts taken on the federal level to change what it means to be a joint-employer. The National Labor Relations Board (NLRB) has worked to expand the definition of joint-employer beyond direct control over wage and hiring policies.
“Through its franchise relationship and its use of tools, resources and technology, engages in sufficient control over its franchisees’ operations, beyond protection of the brand,” the NLRB has previously argued in a legal brief. “To make it a putative joint employer with its franchisees, sharing liability for violations of our Act.”
The International Franchise Association argued the federal push and the lawsuit seeks to misrepresent where liability should rest. McDonald’s and Browning-Ferris Industries are the main cases that have allowed the NLRB to revisit the joint-employer standard. Feds declared Browning-Ferris a joint-employer with Leadpoint Business Services Jan. 12 while the McDonald’s case is still ongoing.
Schneiderman did not respond to a request for comment by TheDCNF.
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