According to court documents, including company records obtained by the attorney general’s office, Abdul Jamil Khokhar, the franchisee, and BMY Foods Inc. paid its 300 current and former workers the same base rate for any hours they worked after putting in 40 a week, which under law should be paid time-and-a-half. To get away with paying less, they allegedly paid overtime hours in cash and created fake names for the employees in the timekeeping system. They then filed fraudulent tax returns that left out the cash payments made to employees under the false names.
Khokhar’s sentencing is set for September 21, when he faces 60 days in jail. He also faces paying the employees $230,000 in back wages as well as an additional $230,000 in damages and $50,000 in civil penalties.
BMY Foods Inc. declined to comment. A Papa John’s spokesperson said in an emailed statement, “Papa John’s is aware of the recent incident involving one of our New York franchisees who was taken into custody this morning. These allegations do not reflect our position as a company. We have a strong track record of compliance with the law. We do not condone the actions of any franchisee that violates the law. This particular franchisee has divested itself of most of its restaurants and is in the process of exiting the system. We will continue to monitor the situation closely and take appropriate action.”
Jail time is unusual for people who perpetuate wage theft, but Schneiderman may not be done. “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,” he said in a press release. “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.”
On Wednesday, the owner of nine Papa John’s franchises in New York City pled guilty to the first criminal case brought by New York Attorney General Eric Schneiderman against a fast food franchisee over wage theft.