Staff at several Subway stores in San Francisco missed out on $265,000 of wages after the franchisee gave them checks that bounced, Labor Department says

• A Bay Area Subway franchisee paid staff more than $265,000 in bounced checks, the DOL said.
• Workers as young as 15 were charged "bad check" fees by their banks as a result, per the DOL.
• The stores also violated child-labor laws, kept tips, and got staff to falsify records, a DOL investigation said.

Staff working for a number of Subway franchise stores in California missed out on $265,000 of wages after their employer paid them in checks that bounced, the Department of Labor said.

John Michael Meza, an owner and operator of Subway franchises in the San Francisco Bay Area, paid his staff at least $265,294 in checks that bounced because the accounts had insufficient funds, the department said in a press release.

Workers as young as 15 had been charged "bad check" fees by their banks, the DOL said in an April lawsuit against Meza, his wife, a business associate, and his companies.

Between July 26 and December 26, 2022, alone, 297 checks bounced from just one bank account belonging to one of Meza's businesses, a DOL investigator said in a declaration.

Vince Chhabria, district judge at the US District Court for the Northern District of California, ordered Meza in a preliminary injunction on May 19 to repay staff the wages they are owed and reimburse employees for any bad check fees they were required to pay.

The investigation by the DOL's Wage and Hour Division covered 14 franchise stores in total, but the department did not say how many had given bad checks to staff. The lawsuit does not state whether the franchisees knew the checks would bounce when they gave them to workers.

The lawsuit details a number of other apparent violations by the stores. The DOL reported that the stores directed 14- and 15-year-old employees to operate dangerous equipment, including ovens, toasters, and cardboard balers, and let minors work longer shifts than allowed and at hours when they're not allowed to work.

In addition, employees under the age of 16 sustained "severe burns" from operating high-temperature toasters and ovens, the DOL said. It also wrote that a 15-year-old employee injured his arm and toe after Meza's wife directed him to climb a ladder and he fell.

The stores also failed to pay wages regularly, didn't compensate staff for the full hours they worked, failed to pay staff an overtime rate, and kept tips left by customers, the DOL said. They told employees to clock-in and clock-out at different stores to falsify records, too, the DOL's release said.

Meza's business associate also threatened to file a false police report against two 15-year-old employees who asked for their unpaid wages, the DOL wrote in the lawsuit.

The Press Democrat had previously reported on some of the allegations.

According to the DOL, Meza interfered with its investigation by coercing employees not to cooperate with investigators and threatening minors who raised concerns or tried to exercise their legal rights.

"Defendants have gone to great lengths to hide their willful safety and wage violations: they direct employees to falsify time records and retaliated against, intimidated and threatened their employees to discourage them from cooperating," the DOL wrote in the lawsuit.

Chhabria's preliminary injunction also forbids Meza and the other defendants from violating child-labor regulations, harassing and threatening employees, and taking retaliatory actions against workers who speak to DOL investigators.

Subway and lawyers for the defendants did not immediately respond to Insider's request for comment, made outside of regular working hours.

Speaking to the San Francisco Chronicle, Meza's lawyer Arkady Itkin said: "Some of the violations will be remedied immediately. Other things will take longer because of the financial hardships my client is undergoing. Two years of lockdowns and back rent owed to landlords have been hard on the business."