Fast food franchises top the list of wage and hour violators for the past thirteen years, according to a CNN analysis of data obtained from the Wage and Hour Division (WHD) of the federal Department of Labor (DOL). CNN identified Subway, McDonald’s, and Dunkin’ Donuts as the franchises with the most investigations, violations, and fines from 2000 to 2013. All three of these companies are franchises with thousands of locations around the country, meaning that the parent companies are not responsible for employment matters at many individual restaurants. Franchisees, independent businesses that operate one or more restaurants under a franchise agreement with a parent company, are usually the ones held liable for wage violations. The system of allowing hundreds or thousands of small businesses to operate individual franchises is part of what is sometimes called the “fissured workplace,” which makes widespread enforcement of minimum wage and other employment laws difficult.
The Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., requires payment of a minimum wage, currently $7.25 per hour, to employees. States and cities may set the minimum wage at a higher rate. Employers must pay hourly workers time-and-a-half for overtime, generally defined as more than forty hours in a week. Common violations include requiring additional, unpaid work from employees, such as time spent changing into or out of work uniforms or equipment. When added to paid hours, this additional time may reduce an employee’s effective hourly rate below minimum wage. The WHD investigates alleged violations of these wage laws, and employees may bring lawsuits to recover back pay and other damages.
Subway has more than 26,000 locations in the U.S., the most of any fast food franchise. CNN’s analysis of the WHD data found more than 1,100 investigations of Subway franchisees from 2000 to 2013, which identified about 17,000 violations of the FLSA and resulted in employee reimbursements of over $3.8 million. Common violations included requiring deduction of a thirty-minute lunch break, regardless of whether the employee took a break, and refusing to pay employees for required closing procedures.
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