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The New York Attorney General (AG) has obtained about $3.8 million in judgments and settlements from multiple pizza franchise operators in recent months for violations of state minimum wage and overtime laws. This includes judgments against two companies that operate Papa John’s pizza delivery businesses and settlements with five Domino’s franchisees. Many state attorneys general pursue civil claims against employers for wage violations, but state and federal laws also allow employees to file suit themselves.

Under the federal Fair Labor Standards Act (FLSA), the minimum wage is $7.25 per hour. 29 U.S.C. § 206(a)(1)(C). New York’s minimum wage is $8.75 per hour as of December 31, 2014. N.Y. Lab. L. § 652. The FLSA requires overtime pay equal to one-and-a-half times the wage of covered employees for hours worked in excess of 40 hours in a week, or 80 hours in a two-week pay period. 29 U.S.C. § 207. New York law follows the FLSA.

The AG filed suit against a Papa John’s franchisee and its two owners in December 2014 for a wide range of alleged wage violations, including under-reporting and rounding down employee hours to avoid paying overtime. New York v. Emstar Pizza, Inc., et al., No. 017345/2014 (N.Y. Sup. Ct., Kings Co.) The lawsuit claimed that various illegal wage practices had been going on for at least six years at the defendants’ six locations. The AG’s Labor Bureau reportedly found that employee paychecks were sometimes short by hundreds of dollars due to under-reporting of hours, failure to pay overtime, and lack of accurate payroll records.
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Many well-known businesses, particularly restaurant chains, use the franchise model to operate national, or even international, chains of locations. Under this model, the franchise owner enters into agreements with other businesses to operate locations using the franchise’s brand name. These businesses, known as franchisees, must abide by a wide range of requirements under the franchise agreement. Employees of individual franchise locations are considered employees of the franchisee, but multiple complaints and lawsuits in recent years have sought to hold a franchisor liable for acts of a franchisee, based on the theory that the franchise agreement gives the franchisor substantial control over the franchisee’s business. A recent lawsuit against the McDonald’s franchisor asserts that it is liable for race discrimination by a franchisee. Betts, et al v. McDonald’s Corp., et al., No. 4:15-cv-00002, complaint (W.D. Va., Jan. 22, 2015).

The plaintiffs are African-American former employees of a company that operates three McDonald’s restaurants in Clarkesville and South Boston, Virginia. They describe a lengthy sequence of events involving alleged racial and sexual harassment and discrimination by managers employed by the franchisee, culminating in an allegedly overt decision to “reduce the number of African-American employees.” Betts, complaint at 28. All but one of the plaintiffs state that they were terminated on May 12, 2014. The other plaintiff alleges that the company constructively discharged her on July 5, 2014, after “months of racial abuse.” Id. at 32.

The plaintiffs filed suit against the franchisee, several individual managers, and the franchisors. They are asserting seven causes of action, including claims for wrongful termination, constructive discharge, and racial harassment under both Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2(a)(1), and 42 U.S.C. § 1981; and sexual harassment under Title VII.
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A delivery driver for United Parcel Service (UPS) filed suit against her employer after it allegedly refused to assign her to light duty due to pregnancy-related lifting restrictions. She claimed that the company violated her rights under Title VII of the Civil Rights Act of 1964, as amended by the Pregnancy Discrimination Act (PDA) of 1978, which defines discrimination on the basis of pregnancy as a form of unlawful sex discrimination. 42 U.S.C. § 2000e(k). The Fourth Circuit Court of Appeals affirmed a U.S. district judge’s order dismissing the lawsuit. Young v. United Parcel Service (“Young I“), 707 F.3d 437 (4th Cir. 2013). The Supreme Court vacated this ruling and remanded the case to the trial court, finding that the plaintiff was entitled to trial on the question of whether she suffered unlawful discrimination. Young v. United Parcel Service (“Young II“), 575 U.S. ___ (2015). While the case was pending, UPS announced a reversal of its policy on light duty for pregnant employees.

The plaintiff worked as a part-time delivery driver. The job description required the ability to lift packages weighing up to 70 pounds. When the plaintiff became pregnant, her doctor told her that she should not lift more than 20 pounds during the first 20 weeks, and no more than 10 pounds after that. The defendant refused to put her on light duty, despite, according to the plaintiff, accommodating other employees with similar lifting restrictions. The plaintiff went on unpaid leave, which resulted in the loss of her employee health insurance.

The defendant’s policy was to provide light duty for employees who were injured on the job, were entitled to an accommodation under the Americans with Disabilities Act, or had lost their certification from the Department of Transportation. Pregnancy did not fit into any of these categories, according to the defendant. The Fourth Circuit held that this policy did not violate the PDA because the plaintiff’s pregnancy was unrelated to her job, the policy only applied to job-related conditions, and it treated “pregnant workers and nonpregnant workers alike.” Young I, 707 F.3d at 449.
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A woman who worked as a nanny for a famous singer at her home in New York City filed suit earlier this year for alleged wage law violations. DaCosta v. Carey, et al., No. 1:15-cv-00596, complaint (S.D.N.Y., Jan. 28, 2015). The plaintiff claims that the defendant required her to work 100 or more hours per week without paying overtime. She is asserting claims under the federal Fair Labor Standard Act (FLSA), 29 U.S.C. § 201 et seq., the Domestic Workers’ Bill of Rights (DWBR), and the New York Labor Law.

The plaintiff worked as a full-time, live-in nanny for the twin children of the defendants, singer Mariah Carey and actor/rapper Nick Cannon. The plaintiff’s duties included caring for the children at the defendants’ New York City home and on Carey’s musical and appearance tours. She accompanied Carey and the children on trips all over the world, she states in her complaint, caring for the children during flights and at other times.

The plaintiff claims that she “spent a significant amount of time responding to [the defendants’] or their agents’ inquiries” regarding the children. DaCosta, complaint at 4. She routinely worked more than 40 hours in a week, and she claims that she often worked more than 100 hours per week, since she was essentially always on call. Carey allegedly called the plaintiff “at hours in the middle of the night” to demand that the plaintiff give her updates or bring her to the children, and she “would not tolerate any delay.” Id. at 5. The plaintiff received pay of $3,000 to $3,600 twice a month, paid by a limited liability company (LLC) of which Carey was a member, and distributed by a management company that reportedly represented Carey. In addition to Carey and Cannon, the complaint names the LLC and the management company as defendants.
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A key question in many wage and hour claims is whether the complainant is an “employee,” and therefore protected by said laws, or an “independent contractor,” who is not covered. The New Jersey Supreme Court, in response to a certified question from the Third Circuit Court of Appeals, applied a very broad definition of “employee” for the purposes of state wage and hour laws. Hargrove, et al v. Sleepy’s, LLC (“Hargrove III“), Nos. A-70 Sept. Term 2012, 072742, slip op. (N.J., Jan. 14, 2015). It applied the definition used in state unemployment law, which is much more favorable to employees than state wage and hour laws have been.

The plaintiffs work as delivery drivers for the defendant, a mattress company. They contend that they are employees, while the defendant argues that they are independent contractors. They signed an “Independent Driver Agreement” (IDA) when they began working for the defendant, which they claim was “a ruse to avoid payment of employee benefits.” Id. at 3. They filed suit in federal court in 2010, alleging that the defendant was wrongfully denying them employment benefits under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq., and the Family and Medical Leave Act (FMLA), 29 U.S.C. § 2601 et seq.

The U.S. district court granted summary judgment for the defendant, finding that the plaintiffs did not meet the definition of an “employee” under ERISA. Hargrove, et al v. Sleepy’s, LLC (“Hargrove I“), No. 3:10-cv-01138, mem. and order (D.N.J., Mar. 29, 2012), citing Nationwide Mutual v. Darden, 503 U.S. 318 (1992). While the court acknowledged that the defendant had “extensive control of deliverer’s activities,” Hargrove I at 10, it noted other factors that led to its conclusion, including the IDAs and the facts that each plaintiff had set up their own business entities, kept their own business records, had relationships with the IRS as business entities, and purchased and maintained their own delivery trucks.
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A federal lawsuit filed by a former cosmetics company employee, which has since been settled and dismissed, raised claims of race, ethnicity, and national origin discrimination, retaliation, and other claims. Meyers v. Revlon, Inc., et al, No. 1:14-cv-10213, complaint (S.D.N.Y., Dec. 30, 2014). The plaintiff accused the chief executive officer (CEO) of numerous derogatory statements, and of retaliation for noting and reporting safety and regulatory concerns. The lawsuit asserted causes of action under federal, state, and city law, including New Jersey’s whistleblower protection statute.

According to his complaint, the plaintiff worked in the cosmetics industry for 35 years, rising from an entry-level position to the defendant’s Chief Science Officer. He took that position in 2010, and he stated that “his career progressed without impediment until November 2013.” Id. at 1. The defendant acquired Colomer, a beauty care company based in Spain, in August 2013. In November 2013, it named Colomer’s CEO as its new CEO and President.

The plaintiff claimed that he played a key role in integrating the two companies, which included reviewing Colomer’s regulatory compliance. He reported concerns about Colomer’s facility in Barcelona to the new CEO. He claimed that the CEO became angry and told him not to discuss regulatory or safety matters with him in order to maintain “plausible deniability.” Id. at 15. From then on, the CEO allegedly harassed and belittled the plaintiff, often in front of colleagues.
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A transgender woman’s sex discrimination lawsuit examined the extent of protection, if any, offered for gender identity by federal anti-discrimination law. Jamal v. Saks & Company, No. 4:14-cv-02782, complaint (S.D. Tex., Sep. 30, 2014). Issues relating to transgender persons, generally defined as someone who identifies with a different gender than the one they were assigned at birth, have gained considerable prominence in recent years, particularly with regard to their rights against workplace and public discrimination. New Jersey and other states prohibit employment discrimination based on “gender identity or expression” N.J. Rev. Stat. § 10:5-12(a), but federal anti-discrimination laws do not expressly mention gender identity.

The defendant operates the Saks Fifth Avenue chain of department stores. The plaintiff, a transgender woman, first worked at an outlet store in suburban Houston, Texas until she was transferred to its “full-line store” in Houston. Jamal, complaint at 3. She alleges that the defendant routinely “misgendered” her by referring to her with male pronouns and other indicators, and denying permission to use the women’s restroom. The store manager allegedly requested that she “change her appearance to a more masculine one.” Id. at 5. Managers and fellow employees, the plaintiff claims, routinely harassed and belittled her on the basis of her gender identity. She complained to the EEOC, and was fired ten days later.

The plaintiff sued for wrongful termination, hostile work environment, harassment, and retaliation under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., and Title I of the Civil Rights Act of 1991, 42 U.S.C. § 1981a. The defendant filed a Rule 12(b)(6) motion to dismiss in December 2014 that referred to the plaintiff as “he,” and used the term “[sic]” when quoting portions of the plaintiff’s complaint that used female pronouns. This term is used to indicate that quoted text includes errors or inaccuracies found in the original. The defendant later withdrew its motion, and the parties stipulated a dismissal of the lawsuit in March 2015. The questions it raised still remain, though.
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The National Labor Relations Board (NLRB) issued a final rule in December 2014 addressing the process by which workers may vote on whether or not to form a union or seek representation by an existing union. 79 Fed. Reg. 74307 (Dec. 15, 2014). The agency, which is charged with enforcing the National Labor Relations Act (NLRA), 29 U.S.C. § 151 et seq., states that the new rule “remove[s] unnecessary barriers to the fair and expeditious resolution of representation questions.” The rule appears to increase unions’ leverage in disputes with businesses over questions of worker representation. Critics call it the “quickie election” rule, and several business organizations are already challenging it in court.

Employees have the right under the NLRA to organize or choose representatives for collective bargaining purposes, or to refrain from this sort of activity. 29 U.S.C. § 157. Employers are prohibited from “interfer[ing] with, restrain[ing], or coerc[ing] employees in the exercise of [these] rights.” Id. at § 158(a)(1). If workers and employers cannot reach an agreement regarding the terms of organizing or representation, the NLRB is authorized to resolve the dispute. Id. at § 159. The U.S. Supreme Court held that the NLRB has broad discretion in these types of disputes. 79 Fed. Reg. at 74308, citing NLRB v. A.J. Tower Co., 329 U.S. 324, 330 (1946), et al.

The NLRA establishes a four-step process for representation disputes: (1) an employee, labor organization, or employer files a petition with the NLRB; (2) the NLRB, or an NLRB regional director, holds a hearing to determine if the petition presents a representation question; (3) an NLRB unit conducts a secret-ballot election; and (4) the NLRB certifies the election results. The statute only provides the basic steps, though, and the NLRB’s experience has shown problems “which cannot be solved without changing current practices and rules.” 79 Fed. Reg. at 74308.
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A federal court ruled in favor of a woman who filed suit against her former employer under the whistleblower protection provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), finding that she had pleaded sufficient facts to allow the case to go forward. Bussing v. COR Clearing, LLC, 20 F.Supp.3d 719 (D. Neb. 2014). The decision is notable because the plaintiff only reported violations of federal money laundering statutes within the company, rather than reporting them to federal regulators. Federal courts have split on the question of whether Dodd-Frank protects whistleblowers who only report internally. The Fifth Circuit reached a contrary decision in Asadi v. G.E. Energy, 720 F.3d 620 (5th Cir. 2013). No New Jersey court has ruled on this issue, although Khazin v. TD Ameritrade Holding Corp., et al, No. 14-1689, slip op. (3rd Cir., Dec. 8, 2014), might be relevant.

Congress passed Dodd-Frank, and President Obama signed it into law in July 2010. The law is a broad response to the financial crisis of 2008, and it includes numerous changes to federal financial regulations. Section 922 of Dodd-Frank amends the Securities Exchange Act of 1934 to add new “incentives and protection” for whistleblowers who report violations of federal financial and securities laws. 15 U.S.C. § 78u-6. If a government agency is able to act on “original information” obtained from a whistleblower’s personal knowledge, which it could not have obtained from another source, the whistleblower could be entitled to 10 to 30 percent of the amount recovered. This section also protects individuals who meet this definition of a whistleblower from retaliation by their employer.

The plaintiff in Bussing was hired by COR Securities Holdings, Inc., an investment management company, to assist with due diligence during its acquisition of Legent Clearing, LLC, a clearing services company. The Financial Industry Regulatory Authority (FINRA), a private organization that regulates its member companies, had investigated and sanctioned Legent several times in the previous two years. The plaintiff learned of this during her investigation, and she developed a “Change of Control Plan” to address Legent’s “troubling regulatory history.” Bussing, 20 F.Supp.3d at 723. She was then recruited by her supervisor at COR to serve as Legent’s Executive Vice President.
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The plaintiffs in a putative collective action under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., have settled their dispute with the defendants, which included allegations of misclassification and failure to pay overtime wages. A federal magistrate recommended approval of a settlement in which the defendants agreed to pay $2.3 million to the plaintiffs. Jones, et al v. JGC Dallas LLC, et al, No. 3:11-cv-02743, findings, conclusions, and recommendation (N.D. Tex., Nov, 12, 2014). The district court approved the settlement, with some adjustments, on December 24, 2014.

The initial plaintiffs in Jones worked for clubs owned and operated by the defendant throughout Texas and in Phoenix, Arizona. They added additional club owners in several amended complaints. They alleged that their primary job duties were to dance on stage and to perform individual dances for customers. They received no payment from the defendants, but instead had to pay a fee to the defendants for each shift. The defendants also allegedly required them to share the money they received from customers with other employees, such as managers and DJs. The defendants set the rates for all of the services expected of the plaintiffs.

The lawsuit was one of many brought by people, mostly women, who work or have worked as exotic dancers at clubs around the country, claiming that the clubs misclassified them as independent contractors instead of employees in violation of the FLSA. Employees are subject to the FLSA’s protections regarding wages and hours of work, while independent contractors are not. Courts around the country have reached different conclusions regarding whether exotic dancers are independent contractors or employees, although the trend seems to be in favor of considering them employees.
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