Subway Caught Underpaying Workers at Multiple Franchises

By: Georgia | Published: Mar 14, 2024

Owners and managers at 10 Subway locations in Washington have been fined after an investigation by the U.S. Department of Labor revealed they were not paying their employees correctly.

The issue involved illegal dipping into tip pools and adjusting timesheets to reduce hours worked, thereby evading overtime payments.

Significant Tip Violations Uncovered

The investigation found that a substantial sum of $80,528 in tips was not distributed to the employees as it should have been.

Interior of a Subway restaurant showcasing the dining area with multiple empty tables and chairs. Promotional banners for new menu items, including 'THE MONSTER' and the '11 SERIES,' hang prominently

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The U.S. Department of Labor emphasized the severity of this violation, stressing the importance of fair compensation for workers.

Overtime Wages Withheld From Workers

In addition to the tip pool violations, the investigation also revealed that $17,546 in overtime wages were withheld.

A Subway employee wearing gloves is preparing a sandwich behind the counter, adding toppings from an assortment of fresh ingredients in trays. Various sandwich bread options are visible in the foreground

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By manipulating timesheets, the employers ensured employees did not receive the overtime pay they were entitled to, further compounding the unfair labor practices observed at these Subway locations.

Explicit Violation of Fair Labor Standards Act

The Department of Labor’s findings indicated that these actions were deliberate violations of the Fair Labor Standards Act.

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Thomas Silva, a district director at the Department’s Wage and Hour Division, stated, “These Subway owners and managers willfully violated the Fair Labor Standards Act by underpaying employees and pocketing tips that did not belong to them.”

Subway Employee Told to Avoid ER After Injury

A related incident in Tennessee saw a Subway employee advised against seeking emergency medical attention after a workplace injury. This incident came to light through a Reddit post by a user named petalios, where an employee shared a distressing experience.

The back section of an ambulance is in view, featuring the word 'AMBULANCE' in reverse lettering with 'PARAMEDICS' written above it. The vehicle is adorned with red and white emergency lights, orange and blue reflective stripes, and a blue medical emblem

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After their hand was crushed at work, they were advised against seeking emergency medical care to avoid getting their supervisor in trouble. Accompanying the post was an image of a sign purportedly from their workplace, instructing employees not to go to the hospital or emergency room after work-related injuries.

Recovery of Unpaid Wages and Tips

Fortunately, the Department of Labor’s intervention led to the recovery of the unpaid wages and tips.

A clear glass jar labeled with a handwritten note saying 'Tip' with a heart symbol, placed on a counter. Inside the jar, various denominations of currency can be seen

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In total, $80,528 in tips and $17,546 in overtime wages were returned to the 100 employees affected by these practices, demonstrating the Department’s commitment to enforcing labor laws.

Substantial Fines for Violations

The Subway franchise owners were also subjected to financial penalties for their actions, paying $98,074 in damages and $22,017 in penalties.

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These fines serve as a financial deterrent to prevent future violations and emphasize the seriousness with which the Department of Labor treats such infractions.

Rules Regarding Tip Pools Clarified

The Fair Labor Standards Act prohibits employers from retaining any portion of employees’ tips, whether directly or through a tip pool.

Overhead view of a clear glass jar lying on its side with a scattering of pennies inside, on a white wooden surface. Next to the jar, there are several U.S. coins including quarters and a dime

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The Department of Labor’s findings reiterate the importance of adhering to these guidelines to ensure fair treatment of employees in service industries.

Subway Not Alone in Labor Violations

This incident at Subway is not isolated within the fast-food industry.

Inside a fast food restaurant, workers in uniforms and face masks are busy preparing orders behind the service counter. Equipment and digital menu screens are visible in the background

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Previous cases in 2022 involving McDonald’s and Chick-fil-A also highlighted issues with adherence to labor laws, indicating an ongoing challenge within the sector to maintain fair labor practices.

Child Labor Violations at McDonald's Expose Industry-Wide Issue

A Department of Labor (DOL) investigation has shed light on child labor violations at McDonald’s, specifically involving 101 minors across 13 locations in the Pittsburgh area.

Illuminated McDonald's sign with the iconic golden arches against a dramatic cloudy sky. Below the main sign is an additional sign for 'McDrive'

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Santonastasso Enterprises LLC, a McDonald’s franchisee, was found to have breached the Fair Labor Standards Act. The company allowed 14- and 15-year-old workers to be employed outside the legal working hours.These minors were working more than three hours on school days, past 7 p.m. while school was in session, and beyond 9 p.m. during summer breaks.

Child Labor Law Violation at North Carolina Chick-fil-A

The Department of Labor has imposed a fine exceeding $6,000 on a Chick-fil-A franchise in North Carolina after determining a breach of federal child labor laws.

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The infringement involved three minor employees at Good Name 22:1 LLC in Hendersonville, who were found to be operating, loading, or unloading a trash compactor—a task deemed unsafe for individuals under 18. Consequently, the Chick-fil-A establishment faced a penalty of $6,450.

Future Implications and Preventative Measures

The Department of Labor’s actions against these Subway franchises send a clear message to employers about the consequences of violating labor laws.

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It illustrates the necessity for businesses to review their practices and comply with legal standards to avoid similar violations in the future, ensuring fair and lawful treatment of all employees.