A Bronx Papa John's franchise owner was charged Wednesday with failing to pay minimum wage and overtime to hundreds of current and former employees, marking the first criminal case by a state attorney general against a fast food franchisee for cheating workers, New York's Attorney General Eric Schneiderman announced.
Abdul Jamil Khokhar, and his company BMY Foods, Inc., allegedly didn't pay wages for about 300 workers in nine pizza restaurants throughout the borough. He was accused of paying a flat rate for all hours worked, including overtime hours, which amounted to about $230,000 in lost wages.
"Mr. Khokhar's effort to hide his crimes may have been crude, but his lies and deception were devastating to the hardworking New Yorkers that depended on his restaurants for a paycheck," Schneiderman said. "When you take money out of the pockets of hardworking New Yorkers, you're taking food off the tables of their families. Today's announcement sends a loud and clear message to every fast food franchise: if you steal wages you will be held accountable and you can go to jail."
Schneiderman said Khokhar would create fake names to pay workers for any hours they worked after they reached 35 or 40 hours. Khokhar, who apparently started this scheme after he was first inspected by the Department of Labor in 2013, then paid the overtime hours in cash to prevent creating a record, he said.
He is also accused of filing fraudulent tax returns that didn't including the cash payments made under the fake names.
Khokhar was charged with several offenses yesterday, including a failure to pay wages and falsifying business records. He pleaded guilty and will be sentenced to 60 days in prison on Sept. 21. He must also pay back the $230,000 in restitution, a spokesman for the attorney general's office said.
In a statement, Khokhar's attorney Allan Bahn said: "Mr. Khokhar and BMY Foods Inc., by pleading guilty have taken full responsibility and will be making restitution per the plea agreement."
The pizza restaurants remained open, Schneiderman said.
Wage violations in the fast food, and other low-wage, industries is "all too common," said Dr. David Weil, the administrator for the U.S. Department of Labor's Wage and Hour Division.
"Through cases such as this one we want to create ripple effects in these industries to change the mindset of employers so that they understand it doesn't pay to exploit their workers. Dr. Weil added.
Schneiderman said it is hard for prosecutors to establish legal liability for a corporate company of the franchise in question.
"We believe that the parent companies should take responsibility and should be concerned about these violations," he said. "There is a higher and higher level of sophisticated interaction and control by the franchisers through the computer systems that they require the franchises to operate."
A spokesman for Papa John's said the company was aware of Khokhar's arrest.
"These allegations do not reflect our position as a company. We have a strong track record of compliance with the law," the spokesman said in a statement. "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."