Papa John’s is in a tight spot. New York State Attorney General Eric Schneiderman just won a lawsuit against a major Papa John’s franchisee based in Brooklyn and Queens, to the tune of $800,000. Franchisee Emmanuel Onuaguluchi has been found guilty of wage theft and has been stiffing his employees for overtime compensation, according to the New York Post.
Schneiderman also said that the franchisee has been robbing his employees of wages by rounding down to the nearest whole hour at the end of every week, and has been doing so for six years. In response, Schneiderman has been trying to sell his franchises to escape the court order but the outcome of the suit stipulates that Onuaguluchi cannot sell the stores he owns until he pays up.
The Attorney General isn’t stopping there. He wants to get John Schnatter (Papa John himself), involved because under the law, franchisees must submit employee shift information to the parent company. Placing legal responsibility for workers’ rights in the hands of a parent company could be happening more often. McDonald’s for instance, was named in a lawsuit In December after a McFranchisee was sued for racial and sexual discrimination. But according to a U.S. Supreme Court case against Best Foods, the parent company would likely not be held responsible: "It is a general principle of corporate law deeply ingrained in our economic and legal systems that a parent corporation (so-called because of control through ownership of another corporation’s stock) is not liable for the acts of its subsidiaries.”
Both the McDonald's and Papa John's cases are still pending in courts.