McDonald’s Franchise Owners Fight Wage Theft Crackdown

A recent advertisement from the group warns that the new labor enforcement law would “do even more damage” to businesses struggling in New York and that similar laws “haven’t worked in California.” New Yorkers for Local Businesses has also sponsored the state’s top political newsletters this spring, from Politico to City & State, placing frequent ads informing readers the law could force businesses to close.

The group characterizes itself as “a statewide coalition of small business workers, managers, and like-minded organizations that are fighting for policies that will create jobs, save jobs, and make New York more affordable.” It did not respond to requests for comment.

Beyond the vocal corporate opposition, the bill also has a quieter critic in the Public Employees Federation, the union that represents staff in the Department of Labor, which alleges that it would effectively privatize government enforcement — a claim that the bill’s sponsors and advocates reject, noting that civil penalties recovered under the law could boost the agency’s budget by more than $100 million annually.

Lawmakers are pushing to pass the bill, known as the EmPIRE Worker Protection Act, in the next few weeks before this year’s session ends.

“The problem is that people who would prefer not to pay their workers are not happy about the bill,” the bill’s Assembly sponsor Jo Anne Simon told New York Focus. “All they have to do is pay their workers and they won’t have any problem.”

The penalties would be stiff, set at a minimum of $500 per worker for every pay period during which there was a violation. When a business pays up, 40 percent would go to the workers and 60 percent would go to the Labor Department to fund staffing and enforcement.

Unions and whistleblowers could also bring such claims, which advocates say will protect affected workers from retaliation.

The legislation’s backers say it would hold employers accountable for violating labor laws, deter them from doing so in the future, and create a new funding stream for the Department of Labor.

It aims to address “the crisis of enforcement,” said Francisco Diez, senior policy strategist for economic justice with the Center for Popular Democracy. “Workers in New York are suffering from having their wages and benefits stolen, suffering health and safety violations, and facing consequences of retaliation and losing their jobs,” he told New York Focus. “This bill will mean that their rights have more teeth than they’ve had in a long time, probably in most of their lifetimes working in New York.”

Workers can currently sue their employers for wage theft. But doing so is increasingly challenging.

“It’s really difficult to get a lawyer to take a one-off wage and hour claim because it’s not worth very much money. And it’s difficult to get employees to want to bring an individual wage and hour claim, because they’re worried about having a target on their back,” said Myriam Gilles, a professor at Cardozo Law and expert in class actions and aggregate litigation.

In the absence of state enforcement, that leaves workers with one option: class action lawsuits. But in the past decade, employers — buoyed by U.S. Supreme Court decisions in their favor — have increasingly put forced arbitration clauses in workers’ contracts that prevent them from bringing class action suits. More than half of private sector workers and 65 percent of low-wage workers have forced arbitration clauses in their contracts, according to the U.S. Department of Labor.

These forced arbitration clauses make it “almost impossible to bring” wage theft cases, Gilles said.

The EmPIRE Act would give workers an avenue to bypass forced arbitration clauses and bring collective cases.

The bill is backed by some of the state’s biggest unions — including 32BJ Service Employees International Union, the Communication Workers of America District 1, the state councils of the Teamsters, the Retail, Wholesale & Department Store Union, and the United Auto Workers in New York — in addition to immigrant and worker groups like Make the Road New York and New York Communities for Change.

The legislation is modeled after California’s Private Attorneys General Act, or PAGA, which also allows workers to sue their employers on behalf of the state. The vast majority of PAGA cases deal with wage theft, and the UCLA Labor Center and labor-aligned groups have published research finding that PAGA has improved compliance with labor law in California. In 2022, $200 million in penalties were collected under the law, which has provided a funding stream for the state’s labor department for more than two decades. Corporations there are trying to repeal it.

The second class action lawsuit, which is ongoing, alleges that when the named worker first raised his legal complaint, Iraci showed up to his workplace and “forced” him to sign a document of an unknown nature. “Plaintiff had never seen the Company’s owner at his place of employment before,” the lawsuit says. The lawsuit also alleges that the worker faced retaliation after raising complaints.

The second director, Dave Singelyn, reportedly owns and operates 30 McDonald’s restaurants in New York and Pennsylvania. The third, Joe Chiczewski, appears to be the field vice president for the McDonald’s corporate office in Stamford, Connecticut.

New Yorkers for Local Businesses’ website lists testimonials from two individuals, “Renee Reardon, Restaurant Owner in the Capital Region” and “Cortesia Norman, Restaurant Owner in the Bronx,” asking Albany to oppose legislation that hurts small businesses. “I just hope they’ll consider how much local businesses mean to their communities, particularly in small towns like mine, before passing legislation that could wipe us out,” reads Reardon’s testimonial.

Both Reardon and Norman operate McDonald’s franchises, according to multiple local news reports on their restaurants.

“McDonald’s franchisees taking a page from the same playbook they did during the Fight for 15 is not surprising,” said Sol Freire Figueroa, labor campaigns director for New York Communities for Change, one of the groups backing the wage theft bill. “The owners of these franchises, who claim to represent the interests of ‘small businesses,’ aren’t fooling anyone: Many own dozens of stores and make huge profits.”

The New Yorkers for Local Businesses website prompts visitors to donate to the entity’s PAC, which is almost exclusively funded by people who listed their addresses as McDonald’s franchises or whose names match McDonald’s franchise owners. One donor to the PAC, franchisee George Michell, paid a $1 million settlement in 2022 after violating numerous labor laws. Another donor, Thomas Parker, shares the name of a McDonald’s franchise owner who was ordered to pay $155,000 to his employees by the city for violating labor laws.