Subway franchisees Jessica and John Meza must close or sell their 14 Subway restaurants by November 27, per a ruling by the U.S. District Court for the Northern District of California.
A 14-unit Subway operator accused of child labor violations earlier this year must sell or close its stores, the United States District Court for the Northern District of California ordered.
The U.S. Department of Labor’s Wage and Hour Division obtained a preliminary injunction against the franchisees—John Meza and his wife, Jessica—in May. The Mezas own and operate 14 stores in the San Francisco Bay Area.
The franchisees were accused of violating child labor, recordkeeping, interference and retaliation provisions of the Fair Labor Standards Act.
The court filed its judgment and permanent injunction September 27. The judgment states the Mezas must pay 184 workers $475,000 in wages, another $475,000 in liquidated damages, $12,000 in punitive damages for “retaliatory conduct” and $150,000 in penalties. Hamza Ayesh, MZS Enterprises LLC and Crave Brands LLC are also named defendants. The LLCs are owned by the Mezas, according to the filing.
A press release from the U.S. Department of Labor called the requirement to close or sell the Mezas’ stores “rare.”
“Losing a franchise is a serious consequence which, of course, my clients aren’t happy about because they have been with Subway for many years and it’s a serious financial and emotional blow from which it will take them a while to recover,” the Mezas’ attorney, Arkady Itkin, wrote in an email.
The Mezas must sell or shut down the restaurants by November 27. The department “insisted on” the move, according to the release.
“This case sends a clear message to others who — despite ongoing litigation and a preliminary injunction — continue their wage theft that the department will use the tools at its disposal to end their illegal practices,” said Regional Solicitor of Labor Marc Pilotin in a statement.
The Wage and Hour Division accused the operators of directing employees as young as 14 and 15 years old to use dangerous equipment, which at times resulted in injuries such as burns. The division also cited Meza for writing bad checks to employees and keeping tips.
Under the FLSA, employees younger than 16 cannot perform work that requires equipment like a high-speed oven, power-driven meat slicers or ladders. Employees younger than 18 cannot perform such tasks if an adult isn’t present. Employees under 16 also have restrictions related to working hours. They cannot work more than 18 hours during a school week, or longer than three hours on a school day.
“We take these matters very seriously and don’t condone this behavior,” A Subway spokesperson said in a statement. “Immediate steps were taken to remove the franchisee from the system when we learned of the DOL investigation. Our restaurants are independently owned and operated, and franchisees are required to follow federal, state and local laws.”
In 2011, John Meza was sentenced to 120 days in jail for felony income tax evasion and concealing property with intent to evade tax collection, according to The Mercury News, a Bay Area news organization. Jessica Meza was sentenced for a misdemeanor count of income tax evasion, in which she served two years of probation and 200 hours of community service.
In April 2020 and February 2021, Crave Brands LLC received two Paycheck Protection Program loans, totaling $32,666, according to ProPublica data. A $13,612 loan was forgiven in October 2021. MZS Enterprises LLC received a $58,200 PPP loan in February 2021.
“Thanks to some very brave young people who stood up to their employers’ exploitation and attempts to intimidate them, the Department of Labor and a federal court are holding these business owners accountable,” said Wage and Hour Regional Administrator Ruben Rosalez in a statement. “With the combined efforts of Wage and Hour Division investigators and the department’s Office of the Solicitor, these employers are facing the consequences for endangering the safety and well-being of children and violating federal law.”
This article has been updated to add comments from the Mezas’ attorney, Arkady Itkin and a Subway spokesperson.