Alleging widespread wage theft, lawsuit comes as Congress examines fast-food giant’s pay practices.
Workers this week filed class-action lawsuits in California, Michigan and New York claiming McDonald’s is systematically stealing employees’ wages by forcing them to work off the clock, shaving hours off their time cards and not paying them overtime, among other practices.
The suits, which were filed Wednesday and Thursday, demand McDonald’s pay back the stolen wages and stop its illegal theft of workers’ pay.
“We work hard, and our wages are already at rock bottom,” said Sharnell Grandberry, a McDonald’s worker in Detroit who earns about $250 each week and is a plaintiff in the Michigan suit. “It is time for McDonald’s to stop skirting the law to pad profits. We need to get paid for the hours we work.”
In three California suits, workers claim that McDonald’s and its franchise owners failed to pay them for all time worked, failed to pay proper overtime, altered pay records and deprived them of timely meal periods and rest breaks. A fourth case makes similar claims on behalf of a statewide class of workers in McDonald’s corporate-owned restaurants, who are adding their claims to a lawsuit for unpaid wages, penalties, and other relief that is already pending against McDonald’s in Los Angeles Superior Court.
“We’ve uncovered several unlawful schemes, but they all share a common purpose—to drive labor costs down by stealing wages from McDonald’s workers,” said Michael Rubin of Altshuler Berzon LLP, an attorney who filed the California suits. “These McDonald’s workers have courageously stepped forward to shine a light on these illegal practices, and already we’ve begun to hear from several co-workers with similar wage theft claims.”
In two Michigan suits, filed against McDonald’s Corp., its U.S. subsidiary and two Detroit-area franchisees, workers assert McDonald’s regularly forces workers to show up for work, but then forces them to wait without pay until enough customers show up, and that it also routinely violates minimum wage laws.
The suits contend that, using McDonald’s franchisor standards and corporation-provided software, McDonald’s franchisees closely monitor the ratio of labor costs to revenues. When it exceeds a corporate-set target, managers tell workers arriving for their shifts to wait for up to an hour to clock in, and sometimes direct workers who have already clocked in for scheduled shifts to clock out for extended breaks until the target ratio is again achieved. Workers are not paid for these wait times, and McDonald’s Corp. knowingly tolerates this practice, in violation of federal labor law.
The suits also allege that McDonald’s forces its low-paid workers to buy their own uniforms. Because McDonald’s restaurants pay at or near the minimum wage, this drives some workers’ real wages below the legal minimum, in violation of federal labor law.
“The Detroit McDonald’s workers are coming into federal court for themselves and their co-workers because McDonald’s schedules them for work, but then makes them wait off the clock until enough customers arrive,” said David Dean of James & Hoffman, an attorney who filed the Michigan suits. “Federal law demands they be paid for such waiting time, and McDonald’s Corp. needs to stop tolerating this illegal practice.”
The case filed in New York federal court seeks to redress McDonald’s admitted failures to reimburse workers at its New York stores for the time and cost of cleaning uniforms—which McDonald’s requires them to wear and to keep clean.
The plaintiffs contend that McDonald’s failures to reimburse employees for uniform cleaning violates the New York state requirement to pay workers weekly for uniform maintenance and often also violates both federal and state minimum wage laws.
“Because McDonald’s restaurants pay so little, forcing workers to clean their Golden Arches uniforms on their own dime drives many workers’ wages below the legal minimum,” said Jim Reif, of Gladstein, Reif and Meginniss, an attorney who filed the New York suit. “With $28 billion in revenue in 2013 alone, McDonald’s can certainly afford to provide its minimum-wage workers with this money to clean their uniforms, as required by law, instead of making them pay for the privilege of wearing McDonald’s advertising.”
Taken together, these lawsuits in California, Michigan and New York contend that McDonald’s, which raked in nearly $5.6 billion in profits last year, regularly fails to pay workers for all the hours they work.
“Despite reaping tremendous revenues and profits thanks to the labors of crew members who earn at or just above minimum wage, McDonald’s is unlawfully failing to pay its workers for all the hours they work and for necessary expenses they incur relating to the uniform McDonald’s requires them to wear,” said Joseph Sellers, of Cohen Milstein Sellers & Toll PLLC, co-counsel in the lawsuits filed in California and New York. “Not only do its practices cause a substantial financial burden for McDonald’s workers, they violate state and federal minimum wage laws as well as other state labor laws.”
The allegations are not isolated ones. A survey conducted in New York last year by Anzalone Liszt Grove Research showed that 84% of fast-food workers are victims of wage theft. In response to the survey, New York Attorney General Eric Schneiderman launched an investigation into pay practices in the state’s fast-food industry. A 2010 study by the National Employment Law Project estimated that the average low-wage worker loses 15% of his or her annual income—roughly $2,600—to wage theft.
“Hidden from view among salaried workers, wage theft is a scourge that eats away at the livelihoods of already-underpaid hourly workers,” said Catherine Ruckelshaus, general counsel at the National Employment Law Project “As these cases show, it’s a persistent problem in too many low-wage industries like fast food, which is why the U.S. Department of Labor has named restaurants and fast food as one of its priority industries for strategic enforcement. McDonald’s requires its workers to work off-the-clock, show up for work without consistent shifts, and deducts expenses from their already-meager pay, chiseling wages while earning billions in profits. These violations can run into the millions of dollars quite quickly, and as one of the largest low-wage employers in the country, McDonalds should be setting standards, not undermining them.”
Just last week, senior Democratic members on the House committee with jurisdiction over labor laws requested detailed information about the business model and labor practices at five of the nation’s largest fast-food companies. In letters to the chief executives of McDonald’s, Yum! Brands, Burger King, Papa John’s and Wendy’s, they wrote that “concern is growing about the fast-food industry’s labor practices.”
Since November 2012, fast-food workers have been campaigning for $15 and the right to form a union without retaliation. It quickly became apparent that workers in the industry are victims of widespread illegal pay practices that erode their already meager salaries. The campaign referred those workers to lawyers, who conducted investigations and have now brought the first of what could be many lawsuits seeking to get the workers back their money and end the illegal theft of their wages.
“We are tired of McDonald’s abusive behavior,” said Guadalupe Salazar, a McDonald’s worker in California who earns about $480 for each 15-day pay period and is one of the plaintiffs. “The company continues to take advantage of me and my coworkers. We can’t allow them to play by a different set of rules just because they’re big. They need to respect us and this suit will help them do that.”