A.G. Schneiderman and U.S. Department of Labor Announce Four Papa John’s Franchisees to Pay Back Workers for Wage Theft

Papa John’s Franchisees, Who Together Owned Total of Nine Restaurants, Must Pay Nearly $500,000 In Back Wages and Damages To Over 250 Workers

Schneiderman: My Office Will Continue Investigating Papa John’s Franchisees Until Every Restaurant Follows the Law

NEW YORK – Attorney General Eric T. Schneiderman and the U.S. Department of Labor today announced four settlements totaling nearly $500,000 with three current Papa John’s Pizza franchisees and one former franchisee, who together owned a total of nine restaurants in Queens, The Bronx, and Brooklyn.  The franchisees investigated by the Attorney General and the U.S. Department of Labor’s Wage and Hour Division admitted to a number of labor violations, including minimum wage, overtime and other basic labor law protections. The employees underpaid by franchises announced in today’s settlements worked in several neighborhoods across Queens, as well as in neighborhoods in Brooklyn and The Bronx.

“Once again, we’ve found Papa John’s franchises in New York that are ripping off their workers and violating critical state and federal laws,” said Attorney General Schneiderman. “Fast food chains across the State should be on notice: we will not stop until your workers are treated with respect and paid lawful wages. Once again, I call on Papa John’s and other fast food companies to step up and stop the widespread lawlessness plaguing your businesses and harming the workers who make and deliver your food.”

“Employers who underpay their employees not only deprive workers of the funds needed to buy their food, pay their rent or attend to other necessities, they undercut those law-abiding employers who pay their employees properly in the first place. Although franchising is a legitimate business model, it can also be associated with practices that lead to violations of labor standards. Franchisees must understand that they are not exempt from the law,” said Dr. David Weil, administrator for the Wage and Hour Division at the U.S. Department of Labor.

“These settlements and our successful partnership with the Attorney General’s office are a warning to employers who choose to violate state and federal wage laws that we do not tolerate such mistreatment of employees and will actively work together to pursue and obtain proper compensation for workers,” said Jeffrey S. Rogoff, the regional solicitor for the U.S. Department of Labor.

Back wages and damages will be distributed to over 250 underpaid workers.  

Today’s agreements followed joint investigations into the franchisees, covering various time periods beginning as early as 2008.   All investigated franchisees admitted to the violations of law outlined in the settlement agreements. The admitted violations included the following:

  • Some stores failed to pay employees the minimum wage and overtime wages required under the federal Fair Labor Standards Act and state law. 
  • Some stores violated a state requirement that employers must pay an additional hour at minimum wage when employees’ daily shifts are longer than 10 hours. 
  • Some stores failed to provide adequate uniforms for employees for the number of shifts in a week, and also failed to pay the required uniform laundry allowance.

In addition to payment of $469,355 in back wages and liquidated damages, the franchisees which remain open must also institute complaint procedures, post a statement of employees’ rights, and designate an officer to submit quarterly reports to the Attorney General's Office regarding ongoing compliance for three years, and one franchisee must also retain an independent monitor going forward. 

The settlements announced today contain the following requirements:

  • Syed Mehboob and his businesses will pay $400,000 in back wages, liquidated damages, and civil money penalties in resolution of the joint investigation, and will retain an independent monitor to ensure future compliance.  Mehboob owned and operated six individually-incorporated franchise restaurants in Queens, as follows: 3320 Woodside Papa, Inc. (operating at 49-19 30thAve., Woodside, New York 11377 ), 99 Food, Inc. (operating at 9906 Northern Blvd., Corona, New York 11369), Sunnyside Papa, Inc. (operating at 40-12 Greenpoint Ave., Sunnyside, New York 11104), Zeeshee, Inc. (previously operated at 23-33 Astoria Blvd., Astoria, New York 11102; closed in March 2015), 193 Papa, Inc. (previously operated at 193-18 Northern Blvd. Flushing, New York 11358; sold in November 2014), and Parson Papa, Inc. (previously operated at 147-14 45thAve., Flushing, New York 11355; sold in November 2014).  The settlement includes restitution for violations from August of 2008 to August of 2014.
  • AMHC Food Inc. and its owner Mohammed Hasnat, operators of  a Papa John’s restaurant at 2241 Westchester Avenue in the Bronx, New York, will pay $40,000 in back wages and liquidated damages. The settlement includes restitution for violations from January of 2014 to July of 2015.
  • Ksara Corp. and owner Ghulam Fani, operators of a Papa John’s restaurant at 189 Avenue U in Brooklyn, New York, will pay $16,000 in back wages and liquidated damages. The settlement with Ksara also includes Zeman Associates, LLC, a prior owner of this franchise.  The settlement includes restitution for violations from February of 2013 until July 2015.
  • Judy & Jesenia, Inc. and owner Jesenia Diaz, who until November 2014 operated a Papa John’s restaurant located at 3528 Nostrand Avenue in Brooklyn, New York, have paid $13,355.78, in back wages and liquidated damages for underpayments from June of 2013 through November of 2014.

In July of this year the Attorney General arrested Abdul Jamil Khokhar, the owner of nine Papa John's Pizza franchises in the ‪Bronx, and his company, BMY Foods, Inc., for failing to pay workers minimum wage and overtime.   Khokhar and BMY Foods have pled guilty to these charges and are on the court calendar to be sentenced in November. According to the plea agreement, it is anticipated that Mr. Khokar and BMY Foods, Inc. will be sentenced to pay $230,000 in back wages to workers, and that Mr. Khokhar will be sentenced to serve 60 days in jail.  At the same time, the U.S. Department of Labor has filed a consent judgment against the enterprise in federal court, and will be recovering   an additional $230,000 as liquidated damages from Khokhar and BMY Foods, and civil money penalties of $50,000, as was announced by Wage & Hour Administrator Dr. David Weil.

In February and March of this year, Attorney General Schneiderman obtained judgments against two other Papa John’s franchisees, Emstar Pizza and New Majority Holdings, for violating wage laws. Those judgments totaled almost $3 million.

The Wage and Hour Division’s investigations were conducted by its New York City District Office, with assistance from the U.S. Department of Labor, Office of the Solicitor.  Senior Trial Attorneys Daniel Hennefeld and Elena Goldstein handled these matters on behalf of the Department of Labor. 

For the Attorney General these matters were handled by Assistant Attorneys General Claudia Henriquez and Najah Farley and Special Counsel Patricia Kakalec.   Terri Gerstein is the Labor Bureau Chief and Alvin Bragg is the Executive Deputy Attorney General for Social Justice.

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