Owners and managers of 10 Subway restaurants in Washington state have been fined after they were found to have been illegally underpaying staff, the U.S. Department of Labor has said.
In a statement on Tuesday, federal officials said that the restaurants, operated by four different franchise owners, had dipped into tip pools and adjusted employee timesheets to artificially reduce their hours worked to evade paying overtime rates.
The Department of Labor said 100 employees across the various locations had been deprived of their earnings. A total of $80,528 in tips and $17,546 in overtime wages have since been recovered.
"These Subway owners and managers willfully violated the Fair Labor Standards Act by underpaying employees and pocketing tips that did not belong to them," Thomas Silva, district for the Department of Labor's Wage and Hour Division office in Seattle, said. "We encourage employers to review their practices and avoid the costly consequences of illegal actions."
Newsweek approached Subway via email for comment on Wednesday. Contact details for the franchise owners could not be immediately found.
Among those to be found to have violated employment laws were Jani Enterprises, which operates one Subway restaurant in Des Moines and another in Kent; Keeyarah Enterprises, which runs two in Lake Stevens; Kian Enterprises, which controls three restaurants in Marysville and one in Arlington; and Quantum Enterprises USA, which operates one in Monroe and another in Sultan.
The Department of Labor said owners and managers were able to participate in tip pools given to staff through credit card payments, despite this being against the Fair Labor Standards Act, which prohibits employers retaining tips under any circumstances.
"Additionally, the employer manually adjusted employee timesheets to reduce hours worked to 40 hours or fewer per week and failed to combine hours worked at multiple locations to evade its legal obligation to pay overtime rates," the federal agency said.
As well as the recovered wages and tips, the employers were asked to pay $98,074 in damages and $22,017 in penalties for the "willful nature of the violations."
Subway is not the first franchise to have a run-in with the Department of Labor over its working practices: in 2022, multiple McDonald's restaurants and one Chick-fil-A franchise were fined for violations of child labor laws.
In the summer of 2023, a Subway employee in Tennessee alleged that they had been told by their supervisor not to attend the emergency room after their hand was crushed at work. A spokesperson told Newsweek at the time that it took health and safety "very seriously" and was looking into the matter.
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