The $2.4B grocery sushi industry has a dark side — and a new lawsuit exposes what workers were left with

Grocery store sushi has become big business, generating an estimated $2.4 billion in annual sales in the deli section, according to a report from the National Fisheries Institute’s (NFI) Sushi Council.

Unfortunately, a new lawsuit alleges that some of the companies preparing this sushi do not have good business practices.

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The Office of Labor Standards and Enforcement for San Diego County filed suit in San Diego Superior Court against five separate grocery store sushi companies in June, and, as NBC San Diego reported, the court filings included some pretty disturbing claims.

Sushi companies accused of mistreating workers

According to SF Gate, the defendants in the lawsuit include Ace Sushi Franchise Corp., Asiana Management Group Inc., Advanced Fresh Concepts Franchise Corp., FujiSan Franchising Corp., and Fuji Food Products Inc.

These companies offer grab-and-go sushi at supermarkets across the U.S., generating large profits for the stores.

Those actually making the sushi, however, may not be making very much money at all. The lawsuit claims that the companies misclassified the sushi makers as independent contractor franchisees instead of as employees. This enabled the companies to:

Avoid labor laws that protect employees from exploitation

Force workers to pay out of pocket for sushi robots, refrigerated displays, equipment, marketing fees, and franchisor services

Require workers to purchase a minimum volume of food and packaging each month to avoid a fee, and potential termination of their franchise agreement

Work extremely long hours, with sushi chefs routinely working 50 to 70 hours weekly, seven days a week

Keep total worker pay extremely low

“After deductions for equipment rental, raw food materials, financing installments, franchise fees, fines, and other charges, many franchisees are left with little to account for the long hours of work,” the lawsuit states.

The lawsuit seeks damages for workers dealing with this situation, including unpaid wages for the workers, as well as attorney fees. MoneyWise reached out to all five sushi companies for comment, with no response.

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Misclassification is a common issue

Classifying workers as employees typically triggers workplace benefits like guaranteed overtime, meal and rest breaks, and minimum wage protections. But the aforementioned companies are calling people working for them franchisees instead.

In fact, when you visit Ace Sushi’s website, Franchise is one of just four links to click on from the home page, and you’re invited to fill out an application, get an interview, get approved, and go through training.

But you can’t just call someone a franchisee if they actually are an employee. State labor laws and tax laws define what an employee is and what an independent contractor or self-employed person is. While these laws can vary by location, typically, some of the key factors determining a worker’s status include:

The level of control the company has over work performance

Whether the employer controls the business and financial aspects of the job

Whether any employment benefits are available to the worker

What written contracts say

“The keys are to look at the entire relationship and consider the extent of the right to direct and control the worker,” The IRS guidance states.

The lawsuit makes clear that officials believe the circumstances of this relationship suggest workers should have been employees and entitled to all of the rights that go along with that status.

“We allege that these chefs were not running their own businesses,” Branden Butler, director of the Office of Labor Standards and Enforcement, told NBC San Diego. “Nearly every major decision, from recipes and food quality to schedules and production requirements, was dictated by the parent companies. Workers routinely worked long hours, met the companies’ requirements for keeping counters stocked, and kept operations running seven days a week.”

If the suit finds that they were employees all along, they should get back pay for some of the money and benefits they missed out on.

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This article originally appeared on Moneywise.com under the title: The $2.4B grocery sushi industry has a dark side — and a new lawsuit exposes what workers were left with

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