In its second wage suit in four years, Pret A Manger will pay $875,000 to employees of its 33 New York City locations, according to Money Maker. The lawsuit, brought forward by a former cashier and cook, alleges that the company rounded down hours — a practice known as time-shaving — and failed to pay overtime wages, as required by New York state law.
On top of seeking damages for the lack of overtime pay and time-shaving, Pret was also accused of disobeying the state’s confusing 2016 “spread of hours” law. Employers must pay one hour of minimum wage pay (currently $13 in New York City for businesses with 11 or more employees) to employees who work over the course of 10 or more hours in the same day.
Pret paid 4,000 New York employees nearly $1 million in 2014 for back-wages and overtime pay. The chain also faces two other U.S. lawsuits for misleading customers by claiming foods with chemical additives as “natural.” In April the U.K.’s advertising regulator fined the chain for similar labeling issues that defy the stricter British definition of the term “natural.”
The past few years have not been particularly kind to Pret’s reputation. The U.K. chain denied liability but paid $910,000 to New York employees less than four years ago for the same kind of wage violations. Though the “spread of hours” law, signed in 2013, had yet to take effect, the 2014 suit also alleged illegal tip-pooling and failure to provide proper wage statements.
Pret isn’t necessarily alone in its time-shaving practices. Ruby Tuesday shelled out $3 million in 2014 and a New York Papa John’s franchisee paid $2 million for the same misdeeds. The Papa John’s lawsuit also claimed the owner illegally paid the subminimum tipped wage to employees performing non-tipped work. A franchise owner of Buffalo Wild Wings in Michigan and Illinois settled a similar dispute in 2015 for $1.8 million, and in 2016 Outback Steakhouse settled a $3 million lawsuit for apparently asking employees to work before actually clocking in.
According to New York City law firm Widgor LLP, time-shaving, off-the-clock work and circumventing overtime pay are three of the most common forms of wage and hour violations in the hospitality industry. The number of such lawsuits doubled from 2006 to 2016, per Restaurant Programs of America, and laws vary among states, counties and cities. The Department of Labor, in investigating 9,000 restaurants, found 84% violating these complex laws in some way.
Franchises rely on individual owners to stay on top of these regulations, a reality that proved thorny for Papa John’s. Independent businesses run into trouble, too, as a Dallas-based barbeque restaurant learned in New York. That lawsuit cites spread of hours violations, which doesn’t exist in Texas. New York’s spread of hours can sow confusion because hospitality employers must pay an extra hour at minimum wage to employees working at any point from, say, 8 a.m. to 8 p.m., even if they took a two-hour lunch break in between shifts.
It’s not yet clear how much spread of hours violations affected Pret’s New York City employees in the latest lawsuit, raised by former employee Manuel Trinidad. But two strikes in four years points to more of a pattern than a one-off flaw in bookkeeping. The news comes off the heels of its $2 billion acquisition by the parent company to Krispy Kreme and Panera.
Pret, which operates more than 800 stores worldwide, has largely denied any wrongdoing in either wage lawsuit. It's just one of a growing number of scandals surrounding. In the U.K., it was fined for misleading "natural" claims. The chain also cooperated with demands to improve allergen information on shelving labels for all of its food items after a 15-year-old girl suffered a fatal allergic reaction to a baguette sandwich she didn’t realize contained sesame seeds. Technically, Pret was adhering to U.K. law, which doesn’t require full ingredient labeling on items made in-house, central to the 32-year-old chain’s mantra, but that law might be changed next year.