Pizza chain Domino's is facing a lawsuit accusing the conglomerate of snubbing its employees of sufficient compensation, and according to reports on Wednesday (May 25), the firm's payroll software is to blame.
New York Attorney General Eric Schneiderman announced this week that a lawsuit has been filed against Domino's on claims the company has failed to pay employees at franchise locations.
"We've found rampant wage violations at Domino's franchise stores," the official said on Tuesday (May 24). "And as our suit alleges, we've discovered that Domino's headquarters was intensely involved in store operations and even caused many of these violations."
Reports said the case focuses on three company franchises, which collectively operate 10 locations across New York City. The firm's headquarters are in Michigan.
The case was filed in New York's Supreme Court in Manhattan and claims Domino's failed to pay workers at least $565,000 because the company operates a faulty payroll system. Domino's uses a payroll tool called Pulse to calculate wages and compensate employees.
Schneiderman declared that Pulse "systematically undercalculates workers' wages."
"This is widespread, systemic illegality, and it victimizes some of the most vulnerable workers in our state," the official said, adding that Domino's has allegedly known about the issue since 2007.
In response, a spokesperson for Domino's said that franchise owners are responsible for employee management, reports said.
The lawsuit introduces broader complications surrounding corporations and their franchise operations. Earlier this year, the U.S. Labor Department issued guidance that clarified the definition of joint employer status, suggesting that the definition be broadened. The department did not issue a ruling on the topic, however.
The controversy stems from whether franchise owners are operators of a business independent of the chain.
Reports said the case marks New York's first that claims joint employer status between a food chain and its franchise locations.
"Domino's does not only control how many pepperonis are on each pizza or how fast pizza should be delivered; Domino's exercises over all key aspects of employment relationships," Schneiderman added to his statement.
Domino's is hardly the first major corporation to get hit with accusations of improper payroll management. Recently, similar cases have focused on company use of payroll cards, a controversial tool that critics say forces employees to pay fees to access their wages. Proponents of payroll cards, however, argue that they allow underbanked workers to access key financial services.