Franchising News

Subway Tops The List Of Franchises Accused Of Underpaying Workers

Written by Tim Morral
Published: 5/7/2014

Department of Labor's Wage and Hour Division data shows that Subway outpaced other franchises in racking up violations for underpayment of employees.

There has been a lot of media attention lately about the impact a higher minimum wage would have on the nation's franchises. In many instances, McDonalds and other well-known franchises have been singled out for providing low wages to their employees.

Subway Franchise Labor Issues

But the pay issue in franchising isn't limited to the minimum wage conversation. Citing data from the Department of Labor's Wage and Hour Division, a recent CNN Money report showed that Subway franchisees are the lead offenders in wage and hour rule violations, resulting in more than 1,100 investigations from 2000 to 2013.

Subway accounts for more than 26,000 locations throughout the U.S., so the number of investigations may be a factor of the sheer scope of the franchise. However, many Subway investigations resulted in multiple violations. Combined, Subway franchisees were responsible for 17,000 violations of the Fair Labor Standards Act and were forced to reimburse employees to the tune of $3.8 million.

Other franchises that topped the list for wage and hour violations during the same time period included McDonald's and Dunkin' Donuts.

Wage-related violations may be more common than it seems. The CNN Money report cited 2009 research showing that 18% of restaurants and hotel workers are the victims of minimum wage violations, 70% are subject to overtime violations and 74% face "off-the-clock" violations in which they were required to do work for which they were not paid (e.g. forcing employees to deduct a 30-minute lunch break from their hours, even when they have been required to work through their lunch breaks).

Lawsuits based on wage and hour complaints are on the rise at fast food establishments and other businesses as workers become more organized in the push for a higher minimum wage.

"All of this chatter around minimum wage, overtime and these franchise issues is educating everybody about the laws," Hollis Pfitsch, a staff attorney for the Legal Aid Society told CNN. "We're going to see an uptick in these cases."

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