A.G. Schneiderman Sues Papa John’s Franchisee For Underpaying Employees At Six Locations

NEW YORK – Attorney General Eric T. Schneiderman yesterday filed a lawsuit in Brooklyn County Supreme Court against Papa John’s pizza franchisee Emstar Pizza Inc. and its owners, Emmanuel Onuaguluchi and Uchenna Onuaguluchi, alleging that they significantly underpaid employees in violation of State Labor Law.  According to the complaint, the violations include shaving workers’ pay by under-reporting hours and rounding down fractions of hours and compensating them nothing for this work, as well as nonpayment of overtime premiums.  The lawsuit seeks to require that Emstar Pizza, Inc., Emmanuel Onuaguluchi and Uchenna Onuaguluchi pay restitution and damages to hundreds of employees who have worked for Emstar and its owners over the past six years.  The lawsuit also seeks to halt any ongoing illegal business practices that are ongoing.  In addition, the lawsuit seeks an accounting of damages, because flaws and inaccuracies in the company’s records prevented a swift and accurate restitution calculation.  Yesterday afternoon, the Court granted a temporary restraining order in order to prevent dissipation of the employer’s assets.

“Like every other business in New York, fast food employers must follow the law,” Attorney General Schneiderman said. “Employers must pay for all hours worked – without shaving hours and without rounding down.  And when people work long weeks, they are entitled by law to get overtime pay.  My office will combat wage theft whenever and wherever we see it in order to protect the rights of hardworking New Yorkers, including workers who labor at fast-food restaurants.”

The lawsuit stems from an investigation by the Attorney General's Labor Bureau into Emstar’s pay practices, supplemented by information provided by the United States Department of Labor, which is also conducting an investigation.  Some of the affected employees were underpaid by hundreds of dollars in a given pay period.  As alleged in court papers, the evidence gathered over the course of the Attorney General’s investigation, including Mr. Onuaguluchi’s testimony and the company’s time and payroll records, showed that the company:

• Brazenly shaved work hours during most pay periods and did not compensate employees anything for this work (usually in an attempt to get employees’ biweekly hours below 80).  Sometimes as many as 18 hours were shaved from an employee’s reported work hours in a given pay period;
• Routinely rounded down employees’ hours worked to the nearest whole hour increment, and regularly failed to pay any wages at all for fractions of hours worked. 
• Regularly failed to pay proper overtime  by giving certain overtime eligible employees managerial-sounding titles such as “head drivers” and “assistant managers,” in an effort to avoid the overtime requirement;
• Regularly failed to pay proper  overtime by calculating overtime – in the rare instances when overtime was paid – based on employees working over 80 hours in a two-week period (instead of after forty hours in one week), thereby underpaying employees who worked over forty hours in one week and fewer than 40 hours in the next;
• Never paid employees “spread of hours” pay, an additional hour of pay required by the Labor Law for shifts in which the interval between the start and end time was longer than 10 hours;
• Failed to pay employees “uniform maintenance allowance,” required under the Labor Law when employers require employees to wear uniforms at work, and failed to provide laundry services or sufficient numbers of uniforms.
• Failed to keep accurate payroll records.  The company’s documents listed certain hours worked under obviously fictitious or placeholder names, like “Training Driver,” “Emstar3 Joe,” “Emstar Emergency,” “Emstar Pizza,” and  “jjjj kill.”

The lawsuit notes that the majority of evidence in the case arises from the employer’s own admissions and documents.  The lawsuit also alleges that in addition to the corporation, Mr. and Ms. Onuaguluchi are individually liable for damages owed to employees, because they were the employer.  The Attorney General is also seeking injunctive relief, in order to ensure labor law compliance going forward, and obtained a temporary restraining order in order to preserve the company’s assets for restitution purposes in light of recent store closures and imminent sale of its remaining, open store.

The Attorney General thanks the United States Department of Labor for its cooperation on this matter.

The lawsuit is the second to come out of ongoing investigations of numerous fast food employers by the Attorney General’s Labor Bureau for labor law violations.  In October, the Attorney General sued another Papa John’s franchisee, New Majority Holdings LLC, and its owner.   That case is ongoing.

The Attorney General has also reached several settlements with fast-food franchises.  In March 2013, the Attorney General secured a settlement with six Domino’s Pizza franchises, which collectively owned 23 restaurants throughout the state, for unpaid minimum wages, overtime, and vehicle expense reimbursements for delivery drivers.  In a separate matter in March 2013, the Attorney General secured a settlement of almost $500,000 for mostly minimum-wage employees of New York City-based McDonald’s franchises operated by the Cisneros Group and its owner Richard Cisneros.  In December 2013, the Attorney General obtained reinstatement for 25 workers at a Domino’s pizza franchise located in Washington Heights, in New York City. In June 2014, the Attorney General obtained $10,000 in restitution for an employee unlawfully discharged after reporting a gas leak at a McDonald’s franchise located in Lyons, in upstate New York.

Emstar’s Papa John’s pizza restaurants have been located at:

• 11702 Atlantic Avenue, Richmond Hill, New York 11419;
• 2838 Atlantic Avenue, Brooklyn, New York 11207;
• 63110 Woodhaven Boulevard, Rego Park, New York 11374;
• 3114 Farrington Street, Flushing, New York 11354;
• 1011 Broadway, Brooklyn, New York 11221; and
• 9431 Rockaway Boulevard, Ozone Park, New York 11417

The case is being handled by Assistant Attorney General Kevin Lynch and Section Chief Andrew Elmore in the Attorney General’s Labor Bureau, which is led by Bureau Chief Terri Gerstein.  The Executive Deputy Attorney General for Social Justice is Alvin Bragg.