September 13, 2016

The franchising structure itself contributes to fast-food restaurant violations, the official overseeing the Labor Department’s wage-and-hour enforcement strategy argues, but the theory is subject to debate.

Regardless of the cause, here’s what’s certain: Fast-food workers earn low wages to begin with and when Wage and Hour Division investigators audit leading quick-service brands, they’re very likely to find Fair Labor Standards Act violations.

Worker advocates say there’s a persistent problem of fast-food managers feeling pressured to cut labor costs, and that the franchise business structure plays a role. Stores run by owners of multiple outlets might be especially prone to cheating workers, Michael Hancock, of counsel at plaintiffs’ firm Cohen Milstein Sellers & Toll PLLC in Washington, told Bloomberg BNA.

“When you’re in a low-margin business like fast food, there’s always going to be pressure to find ways to cut costs,” said Hancock, who was the WHD’s assistant administrator for policy until February 2015. “Part of what’s driving noncompliance is that at the ground level, these managers are given a labor budget” that is unnecessarily low and “that pushes them in some cases to cheat.”

The full article can be read here.