Papa John’s Once Again Faces Wage Theft Allegations

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Papa John’s Once Again Faces Wage Theft Allegations

Jessica Mason Pieklo

A complaint filed in New York accuses a franchise's owners of failing to pay minimum wage and overtime to approximately 300 workers.

Yet another New York-based Papa John’s franchise faces wage theft allegations, including claims that its owners refused to pay workers at least minimum wage and overtime pay.

According to the complaint filed by New York Attorney General Eric T. Schneiderman, Papa John’s franchise owners Abdul Jamil Khokhar and BMY Foods Inc., which together owned and operated nine Papa John’s franchises throughout the Bronx, allegedly failed to pay minimum wage and overtime to about 300 current and former employees, created fictitious identities to conceal overtime worked by employees, and filed fraudulent quarterly tax returns with New York state in order to cover up their alleged wage theft.

The New York Attorney General’s Office is seeking jail time and $230,000 in back wages to Khokhar’s workers who are allegedly due back wages.

This is the third complaint filed this year by Schneiderman’s office against a Papa John’s franchise for wage theft violations. The prosecutions from Schneiderman’s office come as the labor department under President Obama makes strides in bolstering labor and employment law in order to meet current needs, including a recent ruling by the National Labor Relations Board that could hold corporate parents like Papa John’s responsible for the unlawful employment actions of franchise owners like Khokhar.

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Both New York and federal law require employers to pay workers at least the minimum wage for all hours worked and overtime at one-and-one-half times their regular rate of pay for hours worked in excess of 40 hours in any given workweek.

New York’s minimum wage is $8.75 per hour.

Khokhar and BMY Foods Inc. allegedly did not pay workers the overtime rate as required by law, instead paying all workers the same, regular rate of pay for all hours worked, including overtime hours.

To hide this practice, Khokhar and BMY Foods purportedly paid for overtime hours in cash. The complaint alleges they also created fictitious names for employees to use in their computerized timekeeping system and once employees’ weekly hours reached 35 or 40 per week, those employees were allegedly required to use the fictitious names to hide the overtime practices.

Khokhar and BMY Foods Inc. allegedly filed fraudulent tax returns with the State of New York that omitted the cash payments made under fictitious names.

Khokhar created the dual-name scheme after learning he was under investigation by the U.S. Department of Labor, according to the complaint. That investigation led to a consent judgment with the department, whereby Khokhar would pay an additional $230,000 in liquidated damages to employees and $50,000 in civil monetary penalties.

Khokhar’s Papa John’s franchises will be required to designate and create procedures for an internal compliance officer and will be subject to independent auditing of the franchises’ practices.

“This judgment should be a wake-up call for all employers who think they can break the law, not pay their workers, cover it up and get away with it,” Dr. David Weil, administrator for the U.S. Department of Labor’s Wage and Hour Division, said in a statement announcing the criminal charges and civil consent judgement. “Workers in the fast food and other low-wage industries are vulnerable to wage violations, but by working with Attorney General Schneiderman and other partners in New York and across the country we are protecting them from abuse.”