Bay Area Subway Franchisee Faces Closure and $1 Million Penalty for Wage Theft

The U.S. District Court for the Northern District of California ordered a 14-unit Subway franchisee in the San Francisco Bay Area to either close or sell their stores. The employers must pay workers almost $1 million in damages and backpay going as far back as 2019. They are also required to pay thousands of dollars in punitive damages for retaliating against employees who requested their unpaid wages.

The Subway operators, John Michael Meza, and his wife, Jessica Meza, were found guilty of mistreating employees and violating federal child labor laws. The court’s decision was based on an investigation by the U.S. Department of Labor (DOL), which uncovered a range of violations committed by the Mezas and an associate.

The franchisees engaged in wage theft such as failing to pay employees regularly, unlawfully withholding tips and issuing hundreds of bad paychecks without reimbursing workers for fees incurred due to the bounced checks. Subway employees were routinely forced to work more than 40 hours a week without receiving overtime pay. The Mezas also exposed 14- and 15-year-olds to harm by allowing them to use damaged equipment.

Workers who work over 40 hours in a workweek should be paid overtime at 1.5 times their regular rate of pay. Additionally, it is against the law for employers to deduct tips from a worker’s paycheck in California. Workers have the right to retain all the tips they have earned from customers.

Violations of tip-related laws are treated with utmost seriousness by state labor regulators. Employees have the option to pursue legal remedies if their employer unlawfully deducts tips from their paycheck or commits other wage and hour violations. Some avenues for legal action include filing a complaint with the California Labor Commissioner’s Office or initiating a lawsuit against the employer.

The DOL also reported that the Mezas attempted to obstruct the investigation by coercing employees into silence and threatening those who raised concerns about various violations. According to California labor law, workers can speak up about unpaid wages and ask to be paid without the fear of being subjected to negative actions. It is unlawful for an employer to intimidate employees with the threat of retaliation when exercising their employment rights.

Due to the violations, the court not only ordered the closure or sale of the 14 Subway locations but also mandated that the Mezas could not own a Subway or another food franchise for three years. Additionally, the franchisee is required to pay nearly $1 million in back pay and damages to affected employees, sending a strong message against exploitative labor practices. If the Mezas sell their restaurants, they must deposit any money obtained from the sales with the DOL.

The order to close or sell the Subway locations was described as “rare” by the DOL, indicating the severity of the Mezas’ ongoing violations and the government’s commitment to ending illegal labor practices.

Any businesses that breach employment laws should be held accountable. The DOL criticized Subway for allowing the Mezas to continue operating their restaurants despite knowing of the department’s litigation.

In response to the court’s decision, Subway claimed that it took “immediate steps” to remove the franchisee from its system upon learning of the DOL investigation. The statement emphasized that Subway restaurants are independently owned and operated, and franchisees are obligated to adhere to all relevant labor laws. The case underscores the importance of parent companies actively monitoring and responding promptly to allegations of workplace misconduct by their franchisees.

Wage and hour violations occur all too frequently across many different types of workplaces. If your employer is not paying you your wages in full, contact an experienced San Francisco employment lawyer. Attorney Bryan McCormack of McCormack Law Firm is dedicated to helping hard-working employees recover their owed wages and fight back against their employers’ exploitation.

Wage theft can take different forms and can sometimes be difficult to identify. Employers may fail to pay workers the overtime they have earned or refuse to provide proper meal breaks, for example. No matter the type of wage dispute you are facing, McCormack Law Firm is here to help. Contact us today for a free initial consultation to discuss your situation with a San Francisco employment lawyer.