CNN Money Reports on Alleged Wage Violations in Fast Food Industry
CNNMoney has published a May 1, 2014, article claiming that the Department of Labor (DOL) has difficulty cracking down on labor and wage violations in the fast food industry due to the franchise model. Based on data collected by DOL’s Wage and Hour Division that reportedly found individual Subway franchisees “in violation of pay and hour rules in more than 1,100 investigations spanning from 2000 to 2013,” the article claims that these cases amounted to “17,000 Fair Labor Standards Act violations and resulted in franchisees having to reimburse Subway workers more than $3.8 million over the years.”
“Even though fast food locations may look the same and restaurants abide by similar branding and business guidelines, each franchise owner is treated essentially as a small business,” opines CNNMoney’s Annalyn Kurtz. “Meanwhile, the corporate parents can distance themselves from being found liable of labor violations.”
In addition to DOL’s renewed focus on “fissured workplaces” “in which there’s an indirect relationship between the worker and the parent company that ultimately benefits from their labor,” the article notes the rise in private lawsuits related to wage and hour complaints. Backed by unions, these actions increasingly seek to hold corporations liable along with individual franchises. “In cases like these, the corporate parents like to draw a distinctions between themselves and their independently operated stores,” Kurtz concludes. “Restaurants and hotels in particular, are a major focus [of DOL’s investigation into fissured workplaces], not only because they fall into this category, but because they employ a large share of low-wage workers.”
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