On April 9, a Subway franchisee with 29 locations in Tampa, Florida was ordered to pay back wages to 122 employees after a Department of Labor (DOL) investigation concluded that employees were not compensated for taking Subway “Sandwich Artist Certification” training, a violation of the Fair Labor Standards Act (FLSA).

Commenting on the investigation, the DOL director of the Wage and Hour Division’s Tampa District Office stated, “The Wage and Hour Division is continuing its restaurant enforcement initiative throughout Florida to make sure employees of both full-service and limited-service restaurants receive their full pay, and that employers who follow the law do not have to face unfair competition from those who ignore it.”

Franchisees can learn several lessons from the DOL’s investigation:

  1. Be aware that this initiative is not limited to Florida, so the restaurant industry as a whole should be aware it is under heightened scrutiny from the DOL.
  2. Pay attention to training time. Training time is a topic that generates significant litigation under the FLSA because of confusion as to when employees must be compensated for training. An easy rule to follow is that most training time is work time. Employers must compensate employees for training that occurs during an employee’s regular shift as well as training that is required by the employer. Training time does not need to be counted as work time if: 1) it occurs outside of an employee’s normal work schedule; 2) the training is voluntary (there must be no pressure from the employer and no adverse consequences for failing to attend); 3) the training is not directly related to the employee’s current job (typically it is designed to qualify the employee for advancement); and 4) the employee performs no other work during the training. 
  3. It’s important to note that in the case of the Subway franchisee, the DOL expanded its investigation to other locations owned by the same franchisee, greatly increasing the cost and liability for the franchisee. Likely, the DOL received a tip or complaint related to one particular location, and when the DOL discovered the same franchisee owned other stores, it requested records related to each one. Accordingly, franchisees with multiple locations should ensure that each location is in compliance with the law.