Papa John’s founder John Schnatter resigned last week as chairman of the company’s board after it was publicly disclosed that he had used a racial slur during a conference call about how the company could avoid race-related controversies.
Schnatter’s resignation was welcome and necessary; the racist language he used and gross insensitivity he displayed have no place in our society. But this wasn’t the first outrage at the company under his watch: A New York state investigation I worked on in 2016 found evidence of widespread wage theft at Papa John’s locations there. And if our findings had generated the entirely deserved moral opprobrium that his use of the slur did, maybe he would have already left the company.
At the New York state attorney general’s office, we did a broad investigation of labor law violations at Papa John’s restaurants. Here’s what we found: pervasive minimum wage and overtime infractions. Stores that shaved the hours on workers’ time sheets to save a buck on wages. Employers that didn’t reimburse drivers properly for the vehicle-related costs of delivery. In one case, we got a court judgment against a Papa John’s franchisee for $2 million. In another, a franchisee was investigated by the federal Labor Department but continued breaking the law, creating fake names for workers and fake tax and payroll records. He ultimately pleaded guilty after a criminal prosecution and was sentenced to 60 days in jail.
In all, the New York attorney general’s office has so far found violations by eight separate Papa John’s franchisees, who together operated more than 30 restaurants in the state. The entire company reported only 100 outlets in the entire state in 2016, so this is about a third of them, and mind you, we didn’t investigate all of the stores in the state.
What did Papa John’s do in response to these damning findings? The company itself denied responsibility; a typical statement read, “Papa John’s believes that all of its team members should be fairly compensated in accordance with the law.” The corporation effectively blamed its franchisees: “Papa John’s does not control or dictate independent franchisees’ employment activities.”
It’s true that the franchise model gives franchisees — the immediate employers — direct authority for determining workers’ wages and hours. Yet companies have a lot of power to affect and correct problems in franchisees’ operations. And this pattern of franchisee violations was extensive, suggesting a systemic problem that cried out for serious attention by the company at large.
So what happened when our cases came to light? Because of the public outcry, board concerns and overall disgust with this mistreatment of workers, Schnatter immediately stepped down.
Just kidding. He did not step down. There was no indication of board concern and no public outcry, except among fast-food workers and their allies.
That’s often what greets disclosure of mistreatment of workers. Look at long-standing knowledge about how Uber treats its drivers: There’s been little public censure of Travis Kalanick over that. Like Schnatter, Kalanick did eventually resign over other issues — in his case, allegations that the company didn’t take sexual harassment seriously. But Uber’s very business model is based on the glossy, well-spun and highly questionable fairy tale that each driver is running his or her own unusually small yet oddly identical business, and therefore shouldn’t get the already minimal protections afforded to employees under the law. A recent study commissioned by the New York City Taxi and Limousine Commission found that more than 85 percent of drivers for Uber and its peers make less than the equivalent of $15 per hour; 40 percent of drivers have incomes so low they qualify for Medicaid while 16 percent have no health insurance; and 18 percent qualify for federal supplemental nutrition assistance (nearly twice the rate for New York City workers overall).
Another finding: 90 percent of these drivers in New York City are immigrants. Similarly, most of the Papa John’s workers in our cases were people of color, demonstrating the always-intertwined nature of race and class.
But with Uber, as with Papa John’s, there has never been much public stigma related to the company’s evasion of responsibility for even the most minimal well-being of the people who do the work. The shock and disgust emerged only when reports of sexual harassment came to light.
I am in no way diminishing the importance of fighting racism, sexism or other kinds of discrimination; they are utterly hateful, and they fully merit the intense yet still grossly insufficient moral condemnation they receive by all decent people in our society. But mistreating employees should also cause us to recoil. It should also be cause for disgrace. You should not be allowed in polite society if you mistreat your workers — and this includes not just extreme cases, but also the more common skimming and scraping and cheating that make it so hard for people to get by.
This country is based on the notion of opportunity, and we cling to the myth of the American Dream, no matter how illusory it keeps turning out to be. Anyone can make it here. Or, if you are struggling, maybe your kids will go to college and the next generation will make it.
This was never true for vast swaths of people, and now, it’s true for even fewer than it used to be. The historic relation between worker productivity and wages hasn’t existed for decades. Real average hourly earnings increased zero percent over the past year. Companies focus on filling shareholders’ pockets, while their own workers’ pockets remain empty. Union density is low, and unions are under attack. And wage theft is widespread and largely unabated.
We need to focus more on creating the conditions for a decent, dignified and full life for workers in all kinds of jobs. And one first step involves working up some outrage over the gross mistreatment of so many people who do the work that helps make our country function.
I’m glad Schnatter finally stepped down. I just wish it had happened years ago.