Subway, Labor Officials Collaborate to Tackle Violations

May 13, 2013

Connecticut based fast food giant Subway is cooperating with regulators in an effort to end labor law violations among its thousands of franchise outlets. WNPR's Harriet Jones reports.


Milford-based sandwich chain Subway has the highest number of restaurants in the world, surpassing even McDonalds. But in an organization that big, controlling what happens in each independent business can be difficult.


"We noticed a pattern of violations among Subway franchises."


That's Neil Patrick of the federal Department of Labor's wage and hour division - in fact he says his unit noticed an uptick in the number of problems being reported about the chain.


"We have a variety of violations, predominantly in the area of failure to pay overtime for hours worked over 40 in a work week, and also not paying for all hours worked by employees."


Usually that triggers enforcement action by inspectors against the offending franchise, and Patrick says that is going on, but he says in addition, his agency reached out to Subway's corporate headquarters to ask them to cooperate.


"They certainly had inklings that there were some pockets of violations, but since the franchises are independent businesses, they really did not track the level or types of violations disclosed."


Now the corporate headquarters has entered into a collaboration with the Department of Labor to educate its franchisees about the law. Department officials were invited to address two nationwide meetings of franchisees, and they've provided materials to Subway's in-house corporate training division. Patrick says he hopes the level of cooperation from the company can become a model for other large franchises in the future.


"To preserve the integrity of their brand, and to educate the franchisees so that they do not wind up in violation, they were certainly receptive to open the doors to allowing us to train and to educate."


In most markets Subway employees start at minimum wage, so the current debate over raising the wage could have a big impact on the company. Founder and President Fred Deluca said earlier this year he's in favor of a gradual increase in the minimum wage, but he believes a jump to nine dollars an hour, backed by both Governor Dannel Malloy and President Obama would be too steep for some of his franchisees to handle.