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here is a hidden crime wave sweeping New York City. The overwhelming majority of fast food employees working at some of the most recognized and profitable American corporationsreport that their employers are stealing their hardearned wages, according to a recent survey. At McDonalds, Burger King, Dominos, and other chains, workers are experiencing wage theft in a variety of waysfrom getting paid less than the legally mandated minimum wage to being required to work off the clock to receiving paychecks with improper deductions or missing hours.

In a survey of 500 New York City fast food workers conducted in April 2013 by Anzalone Liszt Grove Research, 84 percent of workers surveyed responded that their employer had committed at least one form of wage theft in the past year. Two-thirds of workers surveyed reported that their employer had perpetrated two forms of wage theft and nearly half reported their employer had committed at least three kinds of wage theft.

84% 66% 45% 30%

At least one violation

At least two violations

At least three violations

At least four violations

84% of fast food workers surveyed report experiencing wage theft


Source: Anzalone Liszt Grove Research survey of NYC fast food restaurant workers conducted in April 2013.

Some of the most prevalent types of abuses include: Unpaid Work: Thirty-six percent of the fast food workers surveyed report that they have performed work tasks that they were not paid for before clocking into work or after clocking out at the end of their shift. Overtime Violations: Of the workers surveyed who work more than 40 hours a week, 30 percent were not paid time-and-ahalf for overtime hours. Not Receiving Required Breaks: A quarter of workers surveyed did not receive a required meal break, and 41 percent have been asked to perform work duties while clocked out on break. Delivery-Related Issues: Every single worker surveyed who delivers food to customers, either by bicycle or car, reported experiencing wage theft. Many report not being reimbursed properly for money spent on gas, cell phone bills, bicycle safety equipment or other mandatory, job-related expenses that they incur in the performance of their jobs. This results in lowering their wages below the statutory minimum wage.

While these violations are not a comprehensive list of the many ways fast food workers experience wage theft, they demonstrate how a $200 billion industry takes advantage of its low-wage workforce. In an industry that already pays the bare minimum, workers cannot afford to have their wages stolen. According to the Anzalone survey, 49 percent of workers surveyed reported earning $7.25 or less an hour, with 40 percent having never received a raise to date. In fact, 25 percent of workers surveyed who have been at their fast food jobs for over two years had never had a raise, and over a quarter of workers surveyed have a second or third job. Bureau of Labor Statistics data show the median hourly wage for fast food workers is $8.77,1 and employees work 24.4 hours a week, on average.2 This translates into an annual income of approximately $11,300, which is more than $600 below the Federal Poverty Threshold for a single person under the age of 65.3 The crimes committed by fast food employers are robbing workers of their ability to provide for their families and worsening their quality of life.

Fast Food Wage Theft in NYC


Fifty-seven percent of New York City fast food workers surveyed have not been paid for all the hours they work. This type of wage theft can take many forms, including offthe-clock work, not receiving time-and-a-half pay for overtime, working while on a break, or waiting to clock in after arriving for a scheduled shift. At a McDonalds in Midtown Manhattan, Elizabeth Rene, who earns $7.25 per hour as a cashier, often is forced to work off the clock. She says:

Off-the-Clock Work
One of the most common forms of unpaid work in the fast food industry is working off the clock. This includes unpaid tasks done before or after a shift such as counting the cash register, taking out the trash, cleaning the store, or organizing stock rooms. Thirtysix percent of workers surveyed report working off the clock, and more than one in five report working off the clock often.

Every day when I get to work, I count the register at the beginning of my shift before I clock in and at the end of my shift after I clock out. It can take up to 30 minutes to count the register and then wait for my manager to check it. It might seem like not a lot of time, but it adds up to 2- hours a week that I dont get paid for. The $75 my employer shorts me each month would help me pay my bills on time, buy food and transportation. For me, this amount is the difference between giving my mother money to pay the bills or buying a metrocard. Its aggrivating that McDonalds doesnt pay me for all the hours I work. I feel cheated and used and like Im not appreciated for my hard work.

Its not just a good ideaits the law


The practices fast food workers reported in the Anzalone survey are not just wrong, but illegal under New York State and/or federal law:  Minimum wage is $7.25. Period. Its not legal for an employer to pay any employee less than that, once all tips are added in AND all permitted deductions are taken out.1  Employers have to pay employees for every hour they work. No work before clocking in. No work after clocking out. And, working during a break means its not a break.2  Employers must pay employees one-and-a-half times their regular hourly rate for every hour worked over 40 in a week.3  Employers cant make deductions from paychecks for money robbed from delivery drivers, broken equipment, missing cash from cash registers, meals that employees dont eator anything else except deductions authorized by law, such as Social Security or income taxes.4  Employers have to pay workers on time and cant issue paychecks they know will bounce.5  Its illegal for employers to require employees to spend money on workrelated gas, cell phone charges or on a helmet and safety vest to wear when biking when those expenses cause the workers wages to fall below the minimum wage.6 When employers pay workers at or near the minimum wage and then also commit the practices described above, it has the net effect of lowering workers hourly rate to less than the minimum wage. Breaking some wage and hour laws is a crime in New York State, including paying less than minimum wage, not paying for all hours worked, failing to pay overtime, paying workers late, bouncing checks, and making improper deductions.7

Shaquenna Davis works at a Wendys in downtown Brooklyn as a cashier while also studying criminal justice at LaGuardia Community College. She routinely cleans the store at the end of her shift after being clocked out by her manager.

Fast food employers use many approaches to avoid paying the overtime premium. Examples workers report include:  Paying workers regular rate of pay straight timefor all hours worked, and failing to pay time-and-a-half for hours over 40.  Removing any hours worked over 40 from workers paychecks in the week they were worked and adding those hours to the following weeks paycheck at the lower, straight time rate of pay.  Paying employees with multiple paychecks at straight time rates for workers who work more than 40 hours a week at multiple stores operated by the same entity. Wilton Major has worked for 22 years at three KFC stores in Brooklyn and Queens run by the same franchise operator. He earns $8.45 per hour. Major never receives timeand-a-half overtime pay for the hours he works over 40 each week.

My manager clocks me out early at 1:15 am every day. I have to keep cleaning after Im clocked out to close the store. Five of us work for about a half hour every night that we arent paid for, which adds up to about $80 a month for me since I make $7.25 per hour. It would mean a whole lot to me to have that $80 that Wendys doesnt pay me. I could use that money to pay for school, food, or my metrocard.
Working off the clock, even just a few minutes a day, can add up to a substantial amount of lost income over time. Given the low-wage and frequently part-time nature of fast food work, even a few hours a week can represent a substantial portion of take-home pay.

Overtime Violations
Federal wage and hour law requires employers to pay one-and-a-half times the regular rate of pay for all hours worked over 40 hours each week. However, 30 percent of fast food workers in New York City who report working more than 40 hours a week say their employer does not pay them the proper overtime rate.

I work almost 80 hours a week usually, but KFC doesnt pay me overtime. Its a lot of hard work, but its what I have to do to make ends meet. I make $8.45 an hour, so this adds up to $170 a week in overtime pay that I dont get. I came to this country in 1990 and have been working at KFC since 1991. Every month I send money home to my family in Guyana to support my daughter. If I was paid overtime, I could afford to spend a day or two at home with my mom and my brothers and sisters, and send more money to my daughter.
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Wiltons brother, Alvin Major, a father of four, also works at three different Brooklyn KFCs operated by a common franchisee. Major reports earning $7.25 per hour regardless of the actual number of hours he works. He says:

Several workers at the KFC stores where Alvin and Wilton Major work report experiencing similar overtime violations.

Waiting to Clock In
In addition to overtime violations, fast food workers report waiting to clock in. Specifically, when workers arrive on time at the restaurant for a scheduled shift, they are required to wait to clock in until instructed by management, which can be a few minutes to an hour after their shift was supposed to start. Workers are not paid for the time spent waiting, and often they cannot leave the restaurant because they have to be nearby in case business picks up.

I am never paid overtime, even though I work 68 hours on average every week. I receive three separate pay checks from the same company, but they told me I cannot get overtime because I work at different stores, but thats not true. I should be paid $100 per week more than I am. If I was paid fairly, I would be able to provide more for my family or spend more time with my kids. It is for them that I work so hard.

Alvin Major reports working for KFC over 68 hours a week with no overtime.

Fast food is one of the fastest growing industries in New York


The prevalence of wage theft in fast food restaurants is especially concerning given the size and growth of the industry. More than 50,000 New Yorkers work in fast food restaurants, and employment in the fast food industry in New York City is growing much faster than the overall economy. Since 1999, employment in New York Citys fast food restaurants1 has grown by 55 percent,2 adding over 25,000 jobs.3 This growth rate is 19 times larger than that of the citys private sector overall, where job growth was only 3 percent in the same time period.4

Fast track for fast food job growth in New York City, 1999 - 2011
75% 60% 45% 30% 15% 0% -15% 1999 2001 2003 2005 2007 2009 2011 Limited-Service Eating Places Total Private-Sector Employment

Source: Fast Food Forward analysis of New York State Department of Labor historical employment data.

And this pace of fast food job growth is expected to continue. The New York State Labor Department forecasts 8.2 percent growth in employment in New York Citys food-service industry by 2018, compared with a projected growth of 3.8 percent in overall employment.5 Within the rapidly growing food-service industry, the primary fast food occupation Combined Food Preparation and Serving Workers, including Fast Foodis projected to grow by almost 17.5 percent by 2020 in New York City. This occupation is one of the top six fastest growing of the top 100 occupations in New York City.6

Teresa Ramos, a mother of two who earns $7.40 per hour at a Burger King in Brooklyn, recently arrived to work on time for her 12pm shift, but she was told to wait until 1:30pm before she could clock in and start working. She was not paid for the 90 minutes waiting. Ramos explains:

The manager did not let me clock in at noon because he said the store wasnt busy. I waited in the store for about an hour and a half. I was really frustrated because I have two kids at home and I wish I could have spent this time with my family. Instead, I was waiting at Burger King, and I wasnt being paid. I need those hours to be able to support my family.

Tabitha Verges, who makes $7.25 an hour after four years at a Burger King in Harlem, has to work through her break on a regular basis. She reports, At the end of the day, the manager changes the clock in the system to show that I took a break, so I end up working for free for that half hour. This is in addition to the off-the-clock work Tabitha does taking out the trash and putting away boxes in the supply room. Its hard enough for me to pay my rent and bills. I cant afford to work for Burger King for free. Between working through my breaks and doing work after my shift, Im not getting paid for several hours every week.

Working through Breaks


Under New York State law, employers must give workers an uncompensated meal break during shifts longer than six hours. However, 41 percent of fast food workers say their employer asks them to work while they are clocked out during their break.

Earning Less than Minimum Wage


Some fast food workers in New York City report earning less than minimum wage. The minimum wage in New York is $7.25 per hour, though delivery workers can be paid the New York State tipped minimum wage of $5.65 per hour as long as they earn at least $7.25 per hour when tips are added in.4 Some workers, however, report earning an hourly wage as low as $5.00 per hour.

I risk life and limb delivering pizza. Ive been robbed at gunpoint doing this job. I risk everything, and Dominos doesnt even pay me the minimum. Thats outrageous. Noel Scott, Dominos delivery worker

Noel Scott, a father of one, earns $5.50 per hour at a Dominos in Manhattan. In addition to making less than the tipped minimum wage of $5.65, Scott spends about half his time doing work such as making pizza boxes, preparing sauce and cleaning the store, which makes it impossible to earn a full days tips. Some days he does not earn enough in tips to make the legally mandated minimum wage. Noel says, I risk life and limb delivering pizza. Ive been robbed at gunpoint doing this job. I risk everything, and Dominos doesnt even pay me the minimum. Thats outrageous. Vicente de Jesus Garcia, a father of seven, also earns subminimum pay at a Harlem Papa Johns where he has worked for four

years. Garcia, who typically works 49 hours a week, earns $5.00 per hour for all hours before 40, and $7.50 for hours over 40. Garcia reports that this is how delivery workers at his store are paid. He says:

Its crazy that Papa Johns pays us less than minimum wage. If my employer paid me properly I would be able to buy better clothes, pay for school for my kids, take better care of my household and still be able to pay my rent. But no, I definitely do not make enough for all of those things.
Garcia is underpaid by about $35 a week, or nearly $105 per month.

Four-year Papa Johns driver Vicente de Jesus Garcia earns less than minimum wage and says he needs more to take better care of his family.

Late or bounced checks


A staggering 30 percent of workers report that they have received their paychecks late, were asked by management to wait a day or longer to deposit their checks or had their paychecks bounce. Fast food workers often live paycheck to paycheck and can seldom make ends meet if they are not paid on time, or worse, are forced to incur bank fees or other penalties when deposited checks fail to clear. For example, Tru-von Shim, who worked at a Wendys in Downtown Brooklyn for about a year and a half, had his paycheck bounce about five or six times. Tru-von explains:

Jessica Cogle, who earns $7.30 per hour at a McDonalds in Harlem, is not consistently paid on time. She reports, Several times, my paycheck was not at the store when I went to get it. Once, I spent my last bit of money getting to the store to get paid. The manager told me, Thats not my problem. At the time, Jessica lived in the Bronx. I had to ask my mom and my friend for money just so I could get home that night, and then back to the store the next day to get paid. She finally got paid a day or two later. Eventually, I was kicked out of my apartment because I couldnt pay my rent on time. Its really hard to pay the rent on time when I never know when my check is going to show up. Now, Im living in a shelter, and I have to start all over. Im really worried about my living situation because I have a baby on the way.

Once when my check bounced, my bank charged me about a $12 fee for the bounced check plus an overdraft fee of about $30. Since I was making $7.25 per hour, $42 was almost 6 hours of my pay. I went back to the store the next day to find out how to get my paycheck, and after giving me the runaround, eventually the district manager paid me in cash out of the register. I almost got kicked out of the room I was renting because my check bounced. I had to show all my bank statements to my landlord proving the check bounced and borrow money from a family member to get by that week.

Improper deductions
Nearly half of surveyed fast food workers in New York said their employer routinely makes improper deductions from their paychecksmoney taken from employees paychecks without employee consent or to pay for things that cannot lawfully be deducted from employee wages. Forty-six percent of fast food workers in New York City report receiving paychecks with improper deductions to cover the costs of at least one of the following: meals they did not eat, required uniforms, missing or stolen items, or alleged cash register shortages.

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McDonalds worker Jessica Cogle lost her apartment because her paycheckwhich has been repeatedly lateis not enough to cover rent.

In addition, almost one-third of cashiers in New York City at fast food restaurants such as Taco Bell, McDonalds, Wendys and Burger King report either paying their employer cash out of their own pocket for alleged cash register shortages or having the amount of the shortage deducted from their paychecks, sometimes even if other employees or even managers were using the register. Hector Henningham, who earns $8 per hour after working for nine years at a McDonalds

in Midtown Manhattan, reports that he has to pay his employer for alleged cash-register shortages.

When the shifts change, we have to count out the stores safe and registers. If they are short, we have to pay out of our pockets. One time the safe was short, and I had to pay $100 out of my pocket. Another time, more recently, I had to pay $20 for a short register. I dont think its right, but its the rules of the company. We need the money that we earn.

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Delivery-Specific Wage and Hour Violations


Of all the fast food workers surveyed, delivery workers experience wage theft at a higher rate than non-delivery workers. Every single delivery worker surveyed who uses a bike or car for deliveries reported experiencing at least one form of wage

theft, and over two-thirds of these delivery workers said their employer has engaged in four or more forms of wage theft. In addition to the violations discussed above, delivery workerswho face dangers of robbery and assaultare often not properly reimbursed for car and bicycle expenses, causing their wages to fall below the minimum.

100%

91%

79%

67%

At least one violation

At least two violations

At least three violations

At least four violations

all fast food delivery workers surveyed report experiencing some form of wage theft
Note: Fast food delivery workers include employees who deliver using a bicycle or car.
Source: Anzalone Liszt Grove Research survey of NYC fast food restaurant workers conducted in April 2013.

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Unreimbursed Expenses
Fast food employers often require delivery workers to incur expenses while making deliveries that are not properly reimbursed. Examples of these expenses include: Unreimbursed Calls: Ninety-three percent of workers who make deliveries by car or bicycle are not reimbursed for cell phone charges for calls to customers and the restaurant.

Unreimbursed Gas Charges: Fifty-five percent of workers who use cars to make deliveries are not sufficiently reimbursed for gas. Helmets and Safety Equipment: Three out of ten bicycle delivery workers report that their fast food employer has not provided safety equipment including a helmet, reflectors and bicycle lights or contributed to the cost of these legally required items.

93% 55% 29%


Cell Phone Gas Bicycle Saftey Equipment

Nearly all fast food delivery workers report unreimbursed expenses


Note: The proportions with unreimbursed bicycle safety equipment and gas expenses were calculated from responses of survey participants who reported using bicycles or cars, respectively, for delivery work. The proportion with unreimbursed cell phone expenses was calculated from responses for all delivery workers who use either cars or bicycles.
Source: Anzalone Liszt Grove Research survey of NYC fast food restaurant workers conducted in April 2013.

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Ramon Rodriguez, who has worked as a delivery driver for Dominos Pizza in Brooklyn for the past six years and is paid $7.25 per hour, spends $80 per month for the cell phone he uses to make deliveries and hundreds more on car repairs. Dominos has not reimbursed him for any of these workrelated expenses. Ramon explains:

police. One-third of robbed or assaulted delivery workers were required to pay their fast food employer for the money and/or food stolen from them. Lucien Jean, who has worked for 12 years at Papa Johns in Brooklyn and earns $7.25 per hour, reports, Last year, I was robbed at gunpoint while I was making a delivery in Brooklyn. The robber took all the money that I had received from customers that night to pay for their pizza. I was robbed of over $200. My employer took this money out of my paycheck. Vicente de Jesus Garcia, the Harlem Papa Johns driver who earns less than minimum wage, was robbed on the job in May 2010. He arrived at a large Manhattan apartment building to deliver a pizza when three men hiding in the entrance way pulled him inside. They beat him up and took $400 he had collected from customers that afternoon. He called the police, but by the time they arrived 15 minutes later, the attackers were gone. He then called his manager and returned to the Papa Johns. The manager on duty said that Garcia would have to pay back all the money that was stolen from him. Instead of seeking medical treatment, Garcia went back to work. I was all black and blue because they kicked and punched me, but I went right back to work because I knew I was going to have to use my rent money to pay back my employer. He paid the $400 back the next day.

Right now, I cant use the money I earn on the things I need because I always have to make sure I am saving money to fix my car. When my cars not running, I cant work and get even further behind on bills. If Dominos gave me the money I have to spend on my car so I can keep delivering pizza for them, I could afford to get my own apartment and have a better quality of life.
Even though delivery workers usually earn tips, drivers often use the entirety of their tips to pay for the work expenses described above to be able to keep delivering fast food to customers. The unreimbursed delivery expenses can have the net effect of bringing workers hourly wages to below the minimum.

Robbery
Three of every ten workers who make deliveries using a car or bicycle have been robbed or assaulted while delivering food to customers. Two-thirds of the workers who were robbed or assaulted report that their employer clocked them out and did not pay them for the time they took to seek medical care or report the robbery or assault to the

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Wage Theft is Rampant among Low-Wage Workers


Unfortunately, these survey results are not an anomaly. Various studies show that lowwage employers, fast food chains included, systematically steal workers wages. A 2010 report by the National Employment Law Project (NELP) found that 22 percent of lowwage workers in New York City were paid less than the minimum wage, and 77 percent did not receive overtime pay. In addition, almost one-third of workers surveyed reported working off the clock. These results mirror findings of NELPs 2009 national study of low-wage workers, which found that more than two-thirds of workers interviewed experienced at least one pay-related violation in the previous work week. According to the study, 26 percent of low-wage workers interviewed were paid less than the legally required minimum wage, and 76 percent of those who worked more than 40 hours were not paid the legally required overtime rate.5 wage theft cases. Fast food workers have also won settlements in recent years in a number of lawsuits where they have charged their employers with the kinds of practices detailed above. While some suits making similar wage-theft charges are still pending, examples of cases that parallel the findings in this report include:

Failure to Pay Overtime Wages


 Two McDonalds restaurants in the Bronx paid $106,500 in 2012 to settle a lawsuit charging that when employees worked over 40 hours in a week the owners cut two checks: one for hours worked under 40, and the other (issued by a related corporation) for hours worked over 40. Neither check paid the legally required time-and-a-half rate.7

 A Long Island KFC paid $80,000 in back wages and liquidated damages and $7,700 in civil penalties in 2009 after the U.S. In a 2010 study of U.S. Department of Labor Secretary of Labor brought an enforcement enforcement actions in the fast food industry, action charging the restaurant with willfully researchers found violations of the Federal failing to pay overtime.8 Labor Standards Act in about 40 percent of  The Solicitor of Labor recovered over the agencys investigations of the countrys $28,000 in unpaid overtime wages and top-20 fast food chains from 2001 to 2005.6 obtained over $14,000 in liquidated Given the widespread findings of wage theft damages in a suit against a group of by studies and surveys such as these, it is not Dominos franchisees on Long Island surprising that there is an extensive history in 2012.9 of state and federal law enforcement findings and settlements from fast food chains in

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Off-the-Clock Work
 In a 2009-2010 investigation, the U.S. Department of Labor found that a McDonalds franchisee in New York City required cashiers to count monies from the cash register before punching in and after punching out each day. The McDonalds franchisee paid over $61,000 in back wages to 390 workers.10  In 2010, Dominos pizza delivery drivers in New York State filed suits charging their employers with requiring them to do work without pay and off the clock.11

drivers with similar allegations entered a confidential settlement in 2012 against the worlds largest Pizza Hut franchisee, with 1,153 Pizza Hut restaurants in 28 states.15  In a 2009 case against the operator of 48 Pizza Huts in Colorado, Kansas, Missouri and New Mexico, plaintiffs confidentially settled charges related to inadequate reimbursements and withholding money that customers believed were tips to the drivers.16  In another suit filed in 2009, Dominos drivers across the U.S. have charged that Dominos kept money from a service fee that customers believed was a tip to drivers.17  New York City Dominos delivery drivers charged in a case filed in 2010 that managers often required them to perform cleaning dutiessometimes for as long as two hoursafter the manager had clocked them out. The plaintiffs also alleged that they would return from deliveries to find that the manager had clocked them out in their absence.18 These cases, a sample of those that have been litigated or investigated by enforcement agencies, indicate the seriousness, breadth, and depth of the problem of wage theft among fast food workers. And the problem is likely much worse than the sampling suggests, since workers in low-wage industries under-report violations of wage and hour laws because of language barriers, literacy and immigration status.19 Thus, any sample of litigated or investigated cases likely does not capture the full impact or prevalence of wage theft in this industry.

Failure to Provide Meal Breaks


 California Papa Johns workers charged in 2005 that their employer did not provide required rest and meal breaks. The company agreed to pay compensation to class members.12  At the Bronx McDonalds restaurants cited above for overtime violations, the plaintiffs also reported having meal breaks automatically deducted from their pay checks, regardless of whether they had been permitted to take an uninterrupted meal break.13

Abuse of Delivery Drivers


 A Papa Johns franchisee who operated 82 stores in Minnesota and Colorado settled for $300,000 a 2009 lawsuit alleging that the franchisee reimbursed delivery drivers so little for automobile expenses and other work-related expenses that drivers earned less than the minimum wage.14 Delivery

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Fast Food Industry Fights to Keep Wages and Standards Low


While the fast food industry has a record of stealing wages from workers, it has also fiercely lobbied against anti-wage theft legislation and opposed increases in the minimum wage. The New York State Restaurant Association, the primary trade association that represents the fast food industry in the state, spent over $148,000 in 2010 lobbying against the passage of the New York Wage Theft Prevention Act, the very law that criminalizes many of the practices outlined in this report.20 This type of lobbying is standard for the New York State Restaurant Association and the fast food industry. In addition to fighting the Wage Theft Prevention Act, the New York State Restaurant Association spent $783,000 lobbying against wage and work-related benefit improvements in the past five years, including over $200,000 opposing increases in the state minimum wage and another $222,000 opposing paid sick leave.21 Beyond their representation by the New York State Restaurant Association, many fast food companies also directly lobby against wage and other workplace improvements in New York State. For example, over the past five years, McDonalds, Wendys and YUM! Brands, which owns KFC, Pizza Hut and Taco Bell, directed 69 percent of the over $1.2 million they spent on lobbying in New York State to fight increases to the state minimum wage and oppose initiatives to improve working conditions such as paid sick leave, health care and living wage provisions.22 The industrys lobbying activity in New York State mirrors its broader agenda of opposition to minimum wage increases across the country. The National Restaurant Association, whose board members include representatives from McDonalds, Wendys, and Starbucks,23 has often directly contributed to industry coalitions opposing state ballot initiatives to increase the minimum wage. For example, in 2006 the National Restaurant Association and state and local restaurant associations spent a combined $2.6 million24 to combat ballot initiatives to increase minimum wages in just seven states.25

Its hard enough for me to pay my rent and bills. I cant afford to work for Burger King for free. Between working through my breaks and doing work after my shift, Im not getting paid for several hours every week. Tabitha Verges, Burger King cook

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Driving down delivery wages


One way the fast food industry has lowered wages is through the tip credit. Under the tip credit provision of the federal minimum wage law and the laws of many states, including New York, employers can pay tip-eligible employees a wage below the regular minimum wage, getting credit for tips that are supposed to bring total pay up to the minimum. Pizza chain executives are quite clear that the move to the tip credit was a moneysaving measure: Papa Johns saved on delivery drivers wages by implementing a tip credit pay system in companyowned stores, Papa Johns CFO J. David Flanery said in an investor conference call.1 And Dominos CFO Mike Lawton told investors, we did implement tip credit throughout the system, and that reduced the compensation of the drivers in some states.2 However, as this report demonstrates, delivery workers report they often end up receiving less than minimum wage.
1. J ere Downs, Papa Johns drops $10 deal, The Courier-Journal (Louisville, Kentucky), August 5, 2010. 2. D  ominos Pizza Investor Day, Fair Disclosure Wire, January 12, 2012.

The Brands Control the System


Addressing fast food wage theft is complicated by the structure of the industry, which is built largely on franchising. McDonalds, Burger King, Dominos and their peers have created a detailed and controlled system of food delivery, which they license to franchisees, yet they largely avoid responsibility for wage theft. The franchisor chains dictate the details of a fast food restaurants operations and finances. They specify everythingrestaurant hours, sandwich assembly methods, required equipment and software, customer wait times and employee appearance and behavior. Franchisors typically provide franchisees with the tools and policies that directly impact employees work lives and working conditions, including sophisticated staff scheduling software, staff and manager training materials and personnel policies. Yet, when regulators or workers seek to hold franchisor corporations liable for wage theft in their franchised stores, the corporations typically assert that their franchisees are independent businesses and the franchisors are not the employer. However, these corporations have the power to end wage theft in fast food. To cite one recent example, when foreign guest workers charged the franchisee of

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a Harrisburg, Pennsylvania-area McDonalds with paying below minimum wage, requiring 25-hour work shifts and taking payment for crowded, employer-owned housing out of workers paychecks,26 McDonalds ended its relationship with the franchisee. McDonalds said it immediately addressed the allegations in Harrisburg upon learning of the situation,27 and it is working with its franchisees to make sure they understand the letter and spirit of the law.28

Conclusion
From the stunning statistic that 84 percent of fast food workers surveyed say their employers steal their wages to the voices of individual workers who tell us exactly how their employers steal and how it affects their lives, this report demonstrates that a crime wave is sweeping over fast food workers. Fast food restaurants are paying below the minimum wage. They are failing to pay employees for all the hours they work. They are failing to pay overtime and docking workers for breaks they sorely need but often do not take. And all of this is occurring in a profitable industry where workers are at or near the poverty line and part-time hours are the norm.

Given the scope of the problem as demonstrated by this report and others cited above, it will require systemic action by regulators and political leaders to eradicate fast food wage theft. Fast food corporations have a responsibility to ensure that workers wearing their uniforms and serving their food are paid according to the law. Regulators and law enforcement must cut through franchisors attempts to evade responsibility and hold corporations accountable for wage theft. And political leaders must strengthen the law to ensure that franchisors bear the consequences of wage theft and do not shift responsibility to their franchisees. Because these corporations design, maintain, monitor and profit from the fast food delivery system, they should be the focus of regulatory and political action to eradicate wage theft up and down the fast food chain.

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Endnotes
1. Bureau of Labor Statistics Job title Combined Food Preparation and Serving Workers, Including Fast Food (Occupation Code 35-3021) 2012. http://bls.gov/oes/ current/oes_35644.htm#35-0000 2. B  ureau of Labor Statistics, Hours of production/ nonsupervisory workers, nationally, in limited-service restaurants (2012 NAICS 722513). http://www.bls.gov/ web/empsit/ceseeb7b.htm 3. U.S. Census Bureau, Poverty Thresholds 2012. http://www. census.gov/hhes/www/poverty/data/threshld/index.html 4. N  .Y. Comp. Codes R. & Regs. tit. 12, 146-(subsection) (2011). http://www.labor.state.ny.us/formsdocs/wp/CR146.pdf 5. See Annette Bernhardt et al., Working Without Laws: A Survey of Employment and Labor Law Violations in New York City, National Employment Law Project, New York, N.Y., 2010. http://nelp.3cdn.net/990687e422dcf919d3_ h6m6bf6ki.pdf and Annette Bernhardt, et al. Broken Laws, Unprotected Workers, National Employment Law Project, New York, N.Y., 2009. http://www.nelp.org/page/-/ brokenlaws/BrokenLawsReport2009.pdf?nocdn=1 6.  David Weil, Improving Workplace Conditions through Strategic Enforcement, A Report to the Wage and Hour Division, May 2010, Table 4.5, p. 51. http://www.dol.gov/ whd/resources/strategicEnforcement.pdf 7. P  erez v. Jupada Enterprises, Inc., 10cv3118 (S.D.N.Y. 2012). 8. Solis v. KFC U.S. Properties, Inc., 09cv1970 (E.D.N.Y. 2009). 9. Solis v. Team Roslyn, Inc. et al., 12cv3118 (E.D.N.Y. 2012). 10. C  ompliance Report issued by the U.S. Dept of Labor, Case No. 1554769. 11. C  ano v. DPNY d/b/a Dominos Pizza, 10cv07100 (S.D.N.Y 2010); Laroque v. Dominos Pizza LLC, 06cv6387 (E.D.N.Y. 2006). 12. Alba et al. v Papa Johns et al., 05cv7487 (C.D. Cal. 2005).

16. Darrow v. WKRP Mgmt., LLC, 09cv01613 (D. Colo. 2010). 17. L  uiken v. Dominos Pizza, LLC, 09cv516 (D. Minn. 2009).

Cano v. DPNY d/b/a Dominos Pizza, 10cv07100 (S.D.N.Y 2010). 18. 


19. A  nnette Bernhardt, et al. Broken Laws, Unprotected Workers, National Employment Law Project, New York, N.Y., 2009. http://www.nelp.org/page/-/brokenlaws/ BrokenLawsReport2009.pdf?nocdn=1 20. F  ast Food Forward analysis of data from the New York State Joint Committee on Public Ethics. http://www.jcope. ny.gov/view_filing.html 21. F  ast Food Forward analysis of data from the New York State Joint Committee on Public Ethics. http://www.jcope. ny.gov/view_filing.html 22. F  ast Food Forward analysis of data from New York State Joint Committee on Public Ethics. http://www.jcope. ny.gov/view_filing.html 23. N  ational Restaurant Association, About Us. Last viewed May 9, 2013.http://www.restaurant.org/About-Us/NRALeaders/Board 24. A  ll numbers from Fast Food Forward analysis of data from www.FollowtheMoney.org 25. T  he seven states are: Florida, Ohio, Arizona, Nevada, Colorado, Montana, and Missouri. See: Balletopedia: Arizona Minimum Wage, Proposition 202 (2006); Colorado Amendment 42, Minimum Wage Increase (2006); Michigan Minimum Wage Increase (2006); Missouri Minimum Wage Act, Proposition B (2006); Montana Minimum Wage, Initiative 151 (2006); Nevada Minimum Wage Act, Question 6 (2006); Ohio Ballot Measure 2, Minimum Wage Initiative (2006). http:// ballotpedia.org/wiki/index.php/Minimum_wage_on_the_ ballot#tab=By_year 26. M  iriam Jordan, Kris Maher and Julie Jargon, Guest Worker Visa Troubles Visit McDonalds, Wall Street Journal, March 8, 2013. http://online.wsj.com/article/SB1 0001424127887323628804578348620014963766.html 27. E  ric Veronikis, McDonalds plays expulsion of midstate franchisee Andy Cheung close to vest, PennLive, April 1, 2013. http://www.pennlive.com/midstate/index. ssf/2013/04/mcdonalds_plays_departure_of_m.html

Perez v. Jupada Enterprises, Inc., 10cv3118 (S.D.N.Y. 2010). 13. 


14. B  ass v. PJCOMN, 09cv01614 (D.Colo. 2009). 15. Wass v. NPC International, Inc., 09cv02254 (D. Kan. 2009).

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28. E  mily Jane Fox, Foreign worker hoopla forces McDonalds franchisee out, CNN Money, March 14, 2013. http://money.cnn.com/2013/03/14/news/ companies/mcdonalds-temporary-workers/index.html

Its not just a good idea its the law


1.  N.Y. Lab. Law 662(1).2. N.Y. Lab. Law 652; N.Y. Comp. Codes R. & Regs. tit. 12, 146-1. 2.  This is a violation of the Minimum Wage Act if it brings workers wages below the minimum wage. It is also a violation of Hospitality Industry Wage Order Subpart 146-1.2, which states that the hourly minimum wage for non-tipped workers in the restaurant industry is $7.25 per hour, and Hospitality Industry Wage Order Subpart 146-1.3, which states that the minimum wage for a service employee (which includes delivery workers) is $5.65 per hour, if it brings the workers wages below the minimum wage. It is also a violation of Hospitality Industry Wage Order Subpart 146-2.5, which states that restaurant workers shall be paid hourly rates of pay. Employers may not pay employees on a daily, weekly, salary, piece rate or other non-hourly rate basis. 3.  29 U.S.C.201. 4.  N.Y. Lab. Law 193. According to New York State labor law, employers may not make deductions from employee wages for work expenses unless such deduction is in accordance with the provisions of any law or any rule or regulation issued by any governmental agency. The New York State Department of Labor Hospitality Wage Order, which contains regulations about the wages of workers in the restaurant and hotel industries, provides additional guidance on wage deductions. It states: Employers may not make any deductions from wages, except for credits authorized in this Part and deductions authorized or required by law, such as for social security and incomes taxes. Some examples of prohibited deductions are: (1) deductions for spoilage or breakage; (2) deductions because of non-payment by a customer; (3) deductions for cash shortages or losses; (4) a  nd fines or penalties for lateness, misconduct, or quitting by an employee without notice.

According to the NYSDoL, the hospitality industry wage order is considered a provision of the minimum wage law. http://www.labor.state.ny.us/workerprotection/ laborstandards/workprot/minwage.shtm. Thus the hospitality wage law carries the same penalties as the minimum wage law. 5. N.Y. Lab. Law 191. 6.  29 U.S.C. 206(a)(1); 29 U.S.C. 203(m);29 C.F.R. 531.3(d); A summary of the regulations for commercial bicycle operators are available at: http://www.nyc.gov/html/dot/ downloads/pdf/bicyclerules_english.pdfhttp://www.nyc. gov/html/dot/downloads/pdf/bicyclerules_english.pdf. NYC Administrative Code 10-157 codifies these regulations. 7. See notes 1-6 supra.

Fast food is one of the fastest growing industries in New York


1.  Limited-Service Eating Places, as categorized by the New York State Department of Labor. 2.  Calculations on data from New York State Department of Labor, Current Employment Statistics, Historical Employment by Industry, Data for New York City. http:// labor.ny.gov/stats/cesemp.asp 3.  Calculations on data from New York State Department of Labor, Current Employment Statistics, Historical Employment by Industry, Data for New York City. http:// labor.ny.gov/stats/cesemp.asp 4.  Calculations on data from New York State Department of Labor, Current Employment Statistics, Historical Employment by Industry, Data for New York City. http:// labor.ny.gov/stats/cesemp.asp 5.  New York State Department of Labor, Long-Term Industry Employment Projections, 2008-2018, New York City. http://labor.ny.gov/stats/lsproj.shtm Note that the Labor Department does not break out fast-food restaurants from overall food-service industry. 6.  New York State Department of Labor, Long-Term Occupational Projections, New York City. http://labor.ny.gov/stats/lsproj.shtm

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