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Top Three Wage-Law Violators Are Fast Food Franchises

Top Three Wage-Law Violators Are Fast Food Franchises

Thomas Hawk via photopin cc

By Sarah Belton

Cartwright-Baron Attorney

Subway, McDonald’s, and Dunkin’ Donuts. Each company sells fast food to the public. Each company is doing well financially. And, according to data from the U.S. Department of Labor analyzed by CNN Money, they represent the top three violators of the federal law that set standards for the minimum wage. In the case of Subway, where most employees earn around the $7.25 minimum wage, the DOL found 17,000 FLSA violations in investigations from 2000 to 2013. Those numbers, of course, reflect only the violations that were caught. Alleged violations included forcing workers to perform unpaid work before clocking in and after clocking out, unlawful waivers of overtime pay, and deducting pay for meal and rest breaks never actually taken.

What else do Subway, McDonald’s and Dunkin’ Donuts have in common? They each operate under the franchise model. As we’ve previously discussed on this blog, under the franchise system, companies attempt to walk a fine line: On the one hand disavowing any actual control over wages, hours, and working conditions, while on the other hand strictly regulating almost every aspect of every restaurant that they allow to use their name. When the DOL went looking for the employers responsible for the wage violations it uncovered, the franchisors pointed their fingers at the franchisees. It was not their duty or obligation, the franchisors said, to make sure the workers were properly paid.

But, when the DOL wanted to prevent future unlawful wage violations at Subway restaurants, the agency went right to corporate headquarters. The agency is working with the company to improve compliance with the law, and has been invited to speak at Subway’s annual meetings and publish articles in the Subway newsletter. While these compliance programs are important, they perpetuate the fiction that a franchisor can avoid liability as an employer, even as it has the power to dramatically affect the wage practices throughout its franchise system.

It is important to distinguish fact from fiction. Under the joint employer doctrine, the law recognizes that more than one entity may be held liable as an employer of a worker.  And it is well past time that we look past the franchise nomenclature to determine if the fast food franchisor should be held legally responsible for the working conditions of restaurant workers. The fact that a multibillion-dollar corporation has the resources and know-how to create complex corporate structures should not be a get-out-of-jail free card.  

These practices are profitable for corporations, but they actually take away wealth from low-wage workers.  Executive compensation grows for the 1 percent, workers’ wages remain stagnant, and income inequality worsens.