Court Rules that Restaurant Franchise Must Pay Employees in Money, Not Pizza

A court has fined a pizza restaurant franchise in Australia, and its owner, a total of $334,000 in Australian dollars (AUD), which is approximately $310,653 in the United States (USD), after finding that the restaurant had underpaid its employees hundreds of thousands of dollars. This amount is in addition to unpaid wages, for a total judgment of about $600,000 AUD. The mostly-teenage workforce received free or discounted pizza, sometimes instead of actual pay. The Fair Work Commission (FWC) brought claims against the franchise owner for violations of the country’s wage and hour laws, resulting in the rulings from the Federal Circuit Court of Australia. Fair Work Ombudsman v. Bound for Glory Enterprises, et al, [2014] FCCA 432 (Jun. 6, 2014); Fair Work Ombudsman v. Zillion Zenith Int’l Pty Ltd, et al, [2014] FCCA 433 (Jun. 6, 2014).

The franchise owner, Ruby Chand, operates two La Porchetta franchises in Melbourne, in the state of Victoria, Australia. He operates the restaurants through two companies, Bound for Glory Enterprises (BFG) and Zillion Zenith International (ZZI). At least one employee filed a complaint about underpayment of wages. This resulted in an investigation by the FWC, which performs roles in the Australian federal government similar to those of the U.S. Department of Labor’s Wage and Hour Division, the Equal Employment Opportunity Commission, and the National Labor Relations Board.

The FWC’s investigation reportedly found that Chand and the two companies had underpaid 111 employees during a period from July 2009 to February 2012. Employees would often get free or “half-priced” food and beverages in exchange for a lower hourly rate, a finding that Chand apparently did not dispute. During this time, the FWC also found that Chand claimed government subsidies of about $45,000 AUD, ostensibly for hiring new employees.

The FWC brought claims against BFG and ZZI under Australia’s Fair Work Act 2009, which contains provisions similar to the Fair Labor Standards Act (FLSA) in the United States. Both cases also named Chand as a respondent. The restaurants’ payment practices, the FWC claimed, violated the provisions of the franchisor’s collective agreement, which establishes a minimum wage for franchisee employees. Chand reportedly disputed the underpayment amounts, claiming that he only paid employees less than one dollar below the agreed hourly rate, with the difference offset by discounted food.

The court ruled against Chand, BFG, and ZZI in June 2014, with the judge noting that the restaurants’ method of payment “belongs in the dark ages rather than twenty first century Australia.” It found that BFG underpaid 52 employees a total of $127,824.75 AUD between July 2009 and February 2012, and that ZZI underpaid 59 employees a total of $130,195.12 AUD during that time period. It ordered the respondents to pay those amounts as restitution to the employees, in most cases no later than the end of September 2014.

BFG and ZZI were each ordered to pay penalties of $139,507.50 AUD for violations of the Fair Work Act. Chand was ordered to pay $27,901.50 AUD in penalties in both orders, for a total of $55,803 AUD. The total amount of restitution was $258,019.87 AUD, and the penalties totaled $334,818 AUD, or approximately $240,035.89 USD and $311,481.19 USD, respectively.

If you need to speak to an employment attorney in New Jersey or New York regarding a wage claim or another employment law matter, please contact the Resnick Law Group today at 973-781-1204 or (646) 867-7997.

More Blog Posts:

Lawsuit Alleges Employer Failed to Provide Adequate Restroom Breaks, The New Jersey Employment Law Firm Blog, May 13, 2014
McDonald’s Faces Multiple Lawsuits in New York for Alleged Wage Violations, The New Jersey Employment Law Firm Blog, April 18, 2014
New Jersey Law Against Discrimination Now Protects Workers from “Salary Secrecy” by Prohibiting Retaliation for Inquiring About Wage Discrimination, The New Jersey Employment Law Firm Blog, March 31, 2014

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