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Papa John’s Franchisee Arrested; To Pay $800K for Stealing Worker Pay

New York Attorney General applies criminal charges to Papa John's franchisee
NY AG announces criminal charges against Papa John's franchisee. Photo:YouTube

NEW YORK – The New York Attorney General's Office and the Department of Labor's Wage and Hour division have announced last week charges against a nine-store Papa John's franchisee in The Bronx. They have ordered him to pay $800,000 for back wages and overtime owed to current and former workers, and serve time in jail.

Court documents show that Abdul Jamil Khokhar and his company BMY Foods, Inc. created fictitious identities to conceal overtime worked by employees, and filed fraudulent quarterly tax returns with New York State in order to cover up their alleged wage theft from 300 employees. Charges filed by the Attorney General's Office seek jail time and $230,000 in back wages, while the Labor Department announced the filing of a consent judgment whereby Khokhar would pay an additional $230,000 in liquidated damages to employees and $50,000 in civil monetary penalties. Eric T. Schneiderman stated:

"My office will not hesitate to criminally prosecute any employer who underpays workers and then tries to cover it up by creating fake names and filing fraudulent tax returns," said Attorney General Schneiderman. "We will continue to be relentless in pursuing the widespread labor law violations, large and small, which we have found in the fast food industry.  And I call on franchisors to stand up and stop the widespread lawlessness plaguing your businesses and harming your hardworking employees."

Dr. David Weil, administrator of the U.S. Department of Labor's Wage and Hour Division, agreed. "This judgment should be a wake-up call for all employers who think they can break the law, not pay their workers, cover it up and get away with it. Weil added, "Workers in the fast food and other low-wage industries are vulnerable to wage violations, but by working with Attorney General Schneiderman and other partners in New York and across the country we are protecting them from abuse. It is part of our commitment to ensure that employers who play by the rules aren't unfairly undercut by competitors who cheat, and that workers are guaranteed a fair day's pay for a fair day's work."

Both New York and federal law require employers to pay workers at least the minimum wage for all hours worked and overtime at one-and-one-half times their regular rate of pay for hours worked in excess of forty in any given workweek.  New York's current minimum wage is $8.75 per hour, and the federal minimum wage is currently $7.25 per hour; employers in New York must pay the higher rate.

Pursuant to Labor Department's consent judgment, Khokhar and BMY Foods, Inc. are now expected designate and create procedures for an internal compliance officer and will be subjected to independent auditing of the franchisee's practices.

In February and March of this year, Attorney General Schneiderman obtained judgments against two other Papa John's franchisees, Emstar Pizza and New Majority Holdings, for violating wage laws. Those judgments totaled almost $3 million. A.G. Schneiderman has also secured settlements with 12 separate Domino's franchisees for almost $1.5 million, as well as settlements with McDonald's and KFC franchisees. All of these cases addressed violations of wage and hour laws.

AG responds to media questions

Following last week's press conference, AG Schneiderman answered questions from the media. One he responded to, prompted this statement regarding Papa John's corporate:

"We believe the parent company should take responsibility and be concerned about these violations. It has been difficult for prosecutors to establish legal liability for the franchisor in this area, but it is something we are looking hard at."

The AG also explained:

"There is a higher and higher level of sophisticated interaction and control by franchisors through the computer systems they require franchises to operate. This is something we take very seriously and are looking at hard. They [franchisors] should take an interest in this, if for no other reason than the fact that they care about their brands, and they should care about the idea that people do not like it when you are stealing wages from low wage workers who are living on the edge to begin with. It's really despicable to try and beat them out of even the paltry minimum wage we try to provide them."

Mr. Schneiderman also responded to a question regarding franchisee Abdul Khokhar. He said he had been arrested, that he turned himself in. He also stressed, "We haven't shut down any restaurants. The jobs are still there. He [Khokhar] just has to pay fines and spend some time in jail. This is nothing that is going to cost anyone their job."

The AG further explained that franchising was a complicated industry, referring to some questions in general regarding legislation introduced recently, and anti-trust concerns when it comes to competition. But he said he has not really been immersed in those issues.


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About Janet Sparks

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Public Profile

Janet Sparks is the former publisher of the Continental Franchise Review, an industry newsletter that covered the franchise community for over 30 years. She has also been a columnist for a leading franchise magazine for the past 13 years. Today she is an independent journalist who engages in investigative reporting, tackling complex issues that impact the franchise industry.

Janet can be reached at jsparks@bluemaumau.org or at 303-799-7398.