A group of delivery workers at a Domino's (DPZ) franchise in New York are getting their jobs back, only days after being terminated amid a labor fight with the store's owner, according to documents from the state attorney general's office.
The store, located in upper Manhattan's Washington Heights neighborhood, agreed to reinstate the fired employees by Sunday, the office said. The workers, 25 in all, said they lost their jobs because they had denounced their wages as too low. "The delivery workers ... were let go after complaining that they were still being paid the 'tipped wage' of $5.65 per hour even though they were performing tasks, like kitchen cleaning, that should qualify them for the state's minimum wage of $7.25," the Huffington Post reported Friday.
According to the state attorney general, it already had been probing Robert Cookston, the franchise owner and an operator of other Domino's, before the firings, partly to determine whether he was adhering to various labor laws. The office said it then received word that around Dec. 7, the shop in question terminated the workers "following a dispute precipitated by employee complaints regarding, among other things, performing non-tipped work while earning a tipped rate." Two lawmakers took up the workers' cause last weekend and joined them in trying to get their jobs back.
In New York state, "employees who regularly receive tips may be paid a lower hourly wage and the employer may claim a 'tip credit'" in certain circumstances, a press release on the AG's website explained.
"Currently, the tip credit for delivery workers is $1.60 per hour, so they must be paid at least $5.65 per hour in wages," the statement read. "However, in order to ensure that the lower wage applies only to those who genuinely have the opportunity to receive tips, state and federal laws limit the amount of time a lower-paid, tipped employee may perform untipped work, such as cleaning or kitchen work."
The AG's office indicated it was still investigating pay more broadly at the Cookston stores, but that it had resolved this particular examination, which centered on whether a state prohibition concerning retaliation against workers had been violated.
Reached via email, a Domino's spokesman said that because the store is owned independently, not by the company, it couldn't comment on the allegations surrounding the matter. He did add that: "At our company-owned stores in New York, we do pay at least the minimum wage, plus drivers receive tips and are reimbursed for use of their personal vehicles."
Domino's, headquartered in Ann Arbor, Mich., is the second-largest U.S.-based pizza chain, with more than 10,000 stores bearing its name. However, some 97% of those are owned by franchisees, not the corporation, and the Washington Heights store is among those in private hands.
The arrangement is commonplace in the restaurant industry. For many large chains, a majority of their locations are owned outside the company. With franchising, the corporation licenses its brand, collects regular franchise fees and in some cases sells equipment or ingredients to the franchise owners. But in large measure, the franchise is a standalone business. Though that can shield the corporate office in the event of a legal row, reputationally it doesn't necessarily. That's because most people tend to simply think of Domino's as Domino's, regardless of who operates a particular unit, even though on a day-to-day basis the company doesn't handle the goings-on of its franchisees.
While this particular situation involved Domino's, the topic of fast-food pay is being discussed with greater regularly. Labor organizers and activists are pushing for higher wages at big, well-known companies such as McDonald's (MCD) and Wendy's (WEN), saying workers in some cases aren't provided enough to live reasonably without relying on government assistance. Protests have been held in a number of large cities in an attempt to keep the issue in the public eye.
However, even as rallies have called for raising food-industry pay to as much as $15 an hour, the other side of the argument is that the jobs are easy to learn and are often held by young people, such as students, or those with little if any work history. Additionally, defenders of the current structure say positions on the grill aren't meant to be careers, and that boosting compensation significantly would be too costly and disruptive to restaurants' business model to be implemented. The federal minimum wage is $7.25 an hour.
It's the second case in recent days of an employment flap at a pizza seller making the headlines. Pizza Hut, a unit of Yum Brands (YUM) and the biggest American pizza chain, was put on the defensive after an Indiana franchise owner fired a store manager for refusing to open on Thanksgiving. The manager, Tony Rohr, was offered his job back.