How Fast Food Companies Steal Workers’ Pay

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Olivia Roffle has worked at Papa John’s Pizza in St. Louis, Mo., for three years and she hates it. “It’s just not an enjoyable place to work,” she says. The 23 year old, who is enrolled in classes to become a social worker, doesn’t make enough to pay rent at her own place so she alternates nights at her mother’s, uncle’s and sister’s homes. That was a lousy situation, and then it got worse when her car broke and she didn’t have the money to fix it. So she ends up taking two busses and a train to make it to her shifts. But here’s the thing: Roffle does work enough hours to afford to fix her car. That’s to say, if she were paid for all the hours she works, she’d have a ride. She’s not, she says, because her employer thieves her wages.

If that sounds dramatic, it should. Roffle is one of hundreds of fast food workers in six U.S. cities who in recent months have gone on strike to demand higher wages—$15 an hour, more than twice what she makes now— and the right to unionize. But as much as she and other workers want a living wage, they also want to get paid a legal wage.

“Its kind of like understood, it’s a thing there, it’s an unspoken thing,” Roffle told me about illegal employment practices that shirk workers of wages to which they’re legally and contractually entitled. Roffle is among those now trying to organizer fast food workers in Missouri. “There would be a ton of people making overtime if we got paid for all the hours we work, but we don’t.”

The U.S. Department of Labor found a couple years ago that 40 percent of fast food outposts in the country fail to consistently pay their employees a minimum wage or overtime. And a recent study from New York City found that 84 percent of fast food workers complained that their employers regularly force them to work off the books, work overtime without overtime pay or pony up for their own gas for deliveries. In the case of fast food, the whole structure of franchising is set up to throw workers like Roffle under the bus while insulating corporations like Papa John’s from the messy exigencies of their labor.

Ways to Steal Your Wages

Here’s how Papa John’s gets away with taking Roffle’s pay. She says she’s regularly expected to start her shift before she clocks in, or stay late to clean after she’s already clocked out. She talked me through a recent week, recalling the hours she started and stopped and then which hours she actually worked. All together, she says in an average week she works two to four hours without pay. And so Roffle, who makes $7.35 an hour, loses out on nearly $90 a month. In a year, that’s more than $1,000, which she says would’ve been more than enough to get her car fixed.

“The thing is, you know that you should be paid,” Roffle said, “but to show that you want to keep your job, that you are a good worker, that you are a team player, you do it.”

Across the state, Wilma Brown, a former Kansas City Burger King worker in her mid-30’s, tells a similar tale. Brown says her hours would get changed by her managers on payroll documents after she’d already worked them. She worked several hours more each week than she was paid for, which pushed her earnings below the minimum wage. She also says she was denied overtime pay because whenever she worked more than 40 hours, her manager just erased the hours from the payroll documents.

I asked Brown to prove it, so she emailed me a pile of documents. She printed them out from the franchise’s computer system before she quit about a year ago. Brown first sent me a form called a “Time Clock Detail.” It’s the shift document that her particular Kansas City Burger King sends to the franchise owner, a company called Genesh, Inc., which runs over 50 Burger Kings in Missouri and Kansas. That form shows the hours for which Brown was paid. On one week, the one leading up to Mother’s Day 2012, Brown’s shown to have worked 40 hours in nine shifts.

But Brown says that’s not the number of hours she worked that week. She says she actually worked nearly 44 hours. To prove it, she sent me two other documents. The first is titled a “Shift Edit History.” That, according to a Genesh, Inc. spokesperson, is a database that the franchise stores use to fix any wrong entries before the shift histories are sent to the central office for payroll. The Shift Edit History shows that in five of the nine shifts that week, edits were made to shorten the number of hours Wilma Brown worked. Those five edits shaved off three hours and 54 minutes from her schedule. That’s to say, a manager went into the computer system and changed her hours. Brown says the change was made in order to bring her below 40 hours for the week, so she wouldn’t be paid overtime.

I asked Brown how she could prove that she actually worked 44 hours and not 40 hours. She didn’t pause: “I have my time cards showing when I clocked in and when I clocked out.” She scanned a few and sent them to me. On Mothers’ Day, May 13, 2012, one of the edited schedule days, Brown’s “Employee Clock Out” document says she worked five hours and one minute. That’s one hour and one minute less than the payroll document.

On an average week, Brown says, she lost two or three hours of pay, often for overtime. That comes out to about $1,300 a year, just under a tenth of her annual income when she was working at Burger King.

Across the board, wage theft has a major impact on workers’ lives. One study of low-wage workers in New York City, Chicago and Los Angeles, found that the average employee loses 15 percent of their earnings to wage theft.

When asked about Brown’s charges, Genesh, Inc. was quick to say that any wage and hour violations in their stores should be immediately brought to the attention of human resources or to the Missouri Department of Labor. “No one should be editing anyone’s time for any reason. We want to pay people for what they work,” Anthony Robinson, Genesh’s COO, told me.

Brown hasn’t yet brought her complaint to the company or to the state. She thinks that if she did complain, she might indeed be paid the hours she lost. But for Brown, who has a new job now, that’s not good enough, because she says she thinks every one of her co-workers faced a similar kind of wage theft. In five months of shift documents that Brown sent me, store managers made about 85 shift edits. Brown says that while a few of the changes may’ve been actual corrections, the majority involve the erasure of wages due. She wants a broader investigation and says she has been talking with other workers about how to move ahead.

The ‘It Wasn’t Me’ Business Model

Genesh would have it that the problems in the restaurant, if there are any—a big if, Anthony Robinson says—are a matter of rogue franchise managers. But Brown says that the structure of the franchise leads to the wage practices.

Like any business, Genesh builds a budget with a line item for labor. The company tells the stores how much to spend on wages and instructs their managers to shoot for those goals. Robinson says Genesh tries to make sure the labor cost goals match actual labor needs for each store. But Brown contends that in the day-to-day workings of Genesh’s Burger King franchises, managers end up changing workers’ hours to keep store labor costs at the levels designated by Genesh. Robinson says there’s no pressure on managers to do this. “Never would anybody ask anybody to somehow manipulate somebody’s hours so that they would not get paid what they are owed,” he repeated.

But the pressure to save on hours starts even higher up than Genesh in the Burger King model. Labor may be one of the few sites where the franchise group actually has power to increase its own profits. That’s because fast food restaurants are highly controlled entities with corporate owners, in this case the Burger King Corporation, imposing mandates on franchisees like Genesh for everything down to the napkins and the computer systems they use for payroll. Everything, that is, except hiring, wages and hours.

Take this line from a Burger King franchisee’s contract, which is pretty much like all the other major fast food company’s agreements:

“You must construct, improve and operate your Restaurant in accordance with BKC’s standards and specifications. You must use fixtures, signage, improvements, décor, supplies, other products and equipment, including computer and point of sale hardware and software that meet BKC’s specifications.”

Along with these requirements, franchisees pay a host of fees and costs for things such as supplies and training, and in some cases, when corporations own the buildings, high rents are tied to revenues. These costs are fixed, and that puts a strain on the franchise owners. One McDonald’s franchisee recently told an analyst from the firm Janney Capital Markets that the company is “couponing like there is no tomorrow,” which leaves little room to adjust prices for profit. And news reports suggest that Burger King is following a similar model.

For companies like Burger King, franchising has been a winning proposition. Burger King’s first-quarter earnings this year more than doubled, the Associated Press reports, even though revenue fell, to $327.7 million for the quarter. How? In part, by selling some of its company-owned outlets to franchisees, thus knocking off direct overhead for the stores. Instead of relying on unpredictable sales, the corporation collects fixed franchise fees.

None of this is to say that franchise owners are victims. Though fast food companies like to talk about all the former line workers who now own franchises, many if not most fast food franchises are owned by big companies like Genesh, Inc. that end up making huge profits off of dozens or hundreds of stores. But ultimately, as the franchise contracts show, the corporate offices hold the reins. And despite their intense control of operations and costs, the corporations uniformly insist that they don’t get involved with anything that has to do with hiring, training or setting wages for employees.

Here’s Burger King’s franchisee agreement again:

“Franchisee shall be the sole and exclusive employer of its employees with the sole right to hire, discipline, discharge, and establish wages, hours, benefits, employment policies, and other terms and conditions of employment for its employees.”

Burger King didn’t respond to questions from Colorlines. But Robinson, Genesh’s COO, said that it’s not on the corporate parent’s responsibility to deal with his company’s labor issues. “I don’t think our franchisor is in the position to hold us accountable for the law.”

Holding Companies Responsible

Burger King didn’t get back to me when I emailed to ask about wage and hour violations in franchises. But Domino’s, which is currently being sued by workers in New York for paying well below the minimum wage, did respond. A spokesperson sounded a lot like Ganesh’s Robinson on the corporation’s responsibility for wage and hour abuses. “As a franchisor, we legally cannot and do not tell independent franchisees how they should recruit, hire, manage or compensate their employees, other than to tell them that they should pay competitively and obey all federal, state and local employment laws,” wrote Tom McIntyre, Domino’s vice president for communications.

Of course in this context, competitive pay is the minimum wage. And though McIntyre noted that the company retains the power to cancel a contract if franchisees “violate any of our standards outlined in our standard franchise agreement,” he said in an email that Domino’s has never once cancelled a contract for wage theft. “There have been no instances [of punishing a franchise] that I could find related to compensation,” McIntyre wrote.

Like Robinson, McIntyre said that it was the government’s responsibility to enforce wage and hour issues, not the parent company. It’s a fortuitous time to hold that view. The U.S. Department of Labor, which is tasked with enforcing labor law compliance for all U.S. workers, is historically understaffed. The department now has just 1,000 enforcement agents, about one for every 141,000 workers, McClatchy papers reports. In 1941, the department had an investigator for every 11,000 workers.

That said, where investigations do occur, it appears that the protections corporations enjoy in their franchise contracts may be coming under attack. In the New York class action against Domino’s, a magistrate judge in New York’s Southern District Court has allowed a group of delivery workers to list Domino’s Corporation as a defendant in the case, rather than targeting only the franchisees. Domino’s appeared so heavily involved in the day-to-day workings of the franchises, the magistrate wrote, that at least for now, the parent company will remain a defendant in the case.

Ultimately though, taking on franchisors in the courts may be not be the clearest way to victory. “I am guessing that it will be tough to make [franchisor responsibility] stick as a legal matter,” says Cynthia Estlund, an employment law professor at New York University.

That’s why workers, labor advocates and unions are not relying on courts. The day-long walk outs of fast food workers in six cities thus far have been largely symbolic. And that’s the point. “Can they make the corporations socially liable in the public mind so as to force them to take responsibility?” Estlund asks.

That’s exactly what Roffle hopes she’s doing now. “I would like to tell the other service workers who have already come out and protested, thank you for your support,” she said. “I also want to show those who are afraid—we are a people united.”