The U.S. Department of Labor and the State of New York filed charges against Abdul Jamil Khokhar and BMY Foods, Inc., which together owned and operated nine Papa John’s franchises throughout the Bronx.  According to court documents, the owner and company allegedly failed to pay minimum wage and overtime to approximately 300 current and former employees, created fictitious identities to conceal overtime worked by employees, and filed fraudulent quarterly tax returns with New York State in order to cover up their alleged wage theft. 

The Attorney General’s Office of the State of New York seeks jail time and $230,000 in back wages to Khokar’s current and former employees. The Department of Labor Wage and Hour Division filed a consent judgment whereby Khokhar would pay an additional $230,000 in liquidated damages to employees and $50,000 in civil monetary penalties.

Both New York and federal law require employers to pay workers at least the minimum wage for all hours worked and overtime at one-and-one-half times their regular rate of pay for hours worked in excess of forty in any given workweek.  New York’s current minimum wage is $8.75 per hour, and the federal minimum wage is currently $7.25 per hour; employers in New York must pay the higher rate.

In addition, employers must report all wages paid to employees on tax returns on a quarterly basis and must make contributions to the State Unemployment Insurance Fund based upon the reported wages.

Khokhar and BMY Foods, Inc. allegedly did not pay the overtime premium as required by law.  Instead, charges allege they paid workers the same, regular rate of pay for all hours worked, including hours in excess of forty.  To hide this practice, they allegedly paid for overtime hours in cash, to avoid creating a record.  They also allegedly created fictitious names for employees to use in their computerized timekeeping system: once employees’ weekly hours reached 35 or 40 per week, they were allegedly required to use the fictitious names so that the employer’s failure to pay proper overtime for these hours would be concealed.  Khokar and BMY Foods Inc. allegedly made the cash payments under the fake names and kept separate paper records reflecting both the check and cash payments made to the same workers.  In a further attempt to conceal this scheme, the defendants allegedly filed fraudulent tax returns with the State of New York that omitted the cash payments made under fictitious names.

Khokhar allegedly created the dual name scheme after becoming aware that he was under investigation by the U.S. Department of Labor for wage violations.  As part of its criminal investigation, the Attorney General’s Office obtained records substantiating the cash payments and fictitious names through execution of a search warrant at Khokhar’s Papa John’s franchise office location in the Bronx.

Khokhar and BMY Foods, Inc. are expected to be arraigned in Bronx criminal court today. 

Pursuant to the consent judgment filed by the U.S. Department of Labor, Khokhar’s Papa John’s franchises will be required to designate and create procedures for an internal compliance officer and will be subject to independent auditing of the franchises’ practices.