Labor

Waffle House's Diner Empire is Based on Right-Wing Politics and Ripping Off Workers

Waffle House is financing Republican politicians who advocate for weak labor oversight.

This year, Waffle House, the Georgia-based diner chain that was founded in 1955, celebrates its 60th anniversary. The company, which now boasts over 1,500 restaurants nationwide, began as a modest establishment around six miles from downtown Atlanta, in Decatur. Its simple, three-word logo is, “Good Food Fast”:

Today it has been converted into the Waffle House Museum, and stands as a testament to the rapid market success of a fast food diner that was able to survive the whims of an America where diners' tastes ebb and flow. But while the chain is known for its cheap and delicious eggs, coffee, hashbrowns, and yes, waffles, what's less known is what this cuisine is built upon: a workforce worked to the bone with unfair compensation and a company leadership deeply tied to the Republican Party and the right-wing agenda.

Its practices include charging employees for meals whether they eat or not, underpaying them below the minimum wage, and tightly controlling tips—at one point even seizing a $1,000 tip from an employee. And while they are operating a matrix of policies designed to keep their employees disempowered and unable to organize, they are financing Republican politicians who advocate for weak labor oversight.

Accusations of Wage Theft, Abuse and Disregard For Employees

Waffle House bills itself as “America's Place To Work.” Joe Rogers, Sr., a co-founder of Waffle House, says the restaurant chain is “not in the food business. We are in the people business.”

But employees of Waffle House, particularly those who work as servers, are subject to practices that deny them wages they are owed and reduce their takehome pay in ways that are anything but pro-worker. Interviews with numerous former Waffle House employees, as well as a lawyer representing additional staff, confirm a matrix of rules and regulations designed to maximize Waffle House profits and deny them wages they are entitled to by law.

These policies begin before an employee even starts working at a Waffle House franchise. As a condition of employment, associates at the diner chain are asked to sign an arbitration agreement that essentially disallows more than one employee from joining together to take legal action together against the chain. This is geared toward preventing the most powerful legal weapon workers have to change corporate behavior, the class action lawsuit.

A copy of the arbitration agreement was filed as a public document in the federal lawsuit Masse v. Waffle House, Case No. CIV-12-1301, Doc. # 14-1 (W.D. Okla.), meaning that the public has access to it. We have embedded it below:

Waffle House Arbitration Agreement (Public)

“I have one client who has an unfair labor practice charge pending with the NLRB, and she's claiming that the arbitration agreement that Waffle House and its franchisees have their employees sign is a violation of the National Labor Relations Act because it requires employees [to] pursue claims on an individual basis,” says Mark Kistler, a Kansas-based lawyer who is representing Waffle House workers as clients.

To understand why such action might be necessary, you have to look at how aggressive Waffle House has been to prevent its employees from taking legal action to address their labor grievances.

In 1994, Eric Baker began employment at a Waffle House as a grill operator, signing the arbitration agreement at another Waffle House but not signing one at the restaurant he ended up working at. Within two weeks of starting employment, Baker suffered a seizure as a result of a change in medication. When he returned to work the next day, he suffered another seizure. Waffle House promptly fired him.

Baker filed a charge with the Equal Employment Opportunity Commission, saying his firing was a violation of the Americans With Disabilities Act. The EEOC took his side, filing a lawsuit against Waffle House. Waffle House argued that the arbitration agreement prevented the EEOC from suing, and that there must instead be arbitration. By 2002, this legal fight made it all the way up to the Supreme Court, and in January 2002, the court sided with the EEOC.

The Baker case is a telling example of the sorts of abuses Waffle House hopes to shield with its use of mandatory arbitration agreements as a condition of employment.

One of the major areas for a possible class action lawsuit that Waffle House would likely most fear would be a complaint about wage theft. Under current law, employers are allowed to pay employees below the federal minimum wage if they are, through tips, compensated up to at least the level of the minimum wage (the federal tipped minimum wage is $2.13). “If you're working at a fairly upscale restaurant that does brisk business, this isn't going to be a problem,” notes Kistler. But Waffle House is far from upscale; its menu items are are all well below $10, and tips are proportionally low as well.

When employers fail to compensate employees for a lack of tips, they are engaging in wage theft, intentionally underpaying employees below what they are obligated to under federal law. Although it is difficult to prove that Waffle House is engaging in systematic wage theft —franchised restaurants do not manage each store on a day-to-day basis—numerous interviews with employees reveal a widespread pattern of practices showing the issue is prevalent throughout Waffle House franchises.

Under federal law, employees can only be asked to perform up to 20 percent of their time doing non-tipped work before their employers are required to pay them the full minimum wage rather than the tipped wage. 

Waffle House does not typically hire someone whose job is specifically to do the cleaning – things like washing dishes or cleaning the bathroom. As one testimony on Glassdoor, the employee review website, states, “they...get away with not having dishwashers and cleaning staff by calling their servers salespersons instead, so on top of traditional sidework they are responsible for cleaning all dishes, cleaning windows inside and out, cleaning bathrooms, cleaning the ceiling tiles, floors, etc.”

What this results in is that the same people doing tipped work – the servers – are often spending more than a fifth of their time on a shift doing non-tipped work, such as cleaning, and not getting compensated up to the full minimum wage for it. “I've talked to several Waffle House employees. I can tell you that with regard to at least two employees, that they have at least informed me that in fact was happening, that they're spending far more than 20 percent of their time on cleaning,” says Kistler.

This form of wage theft was so common that when a former Waffle House employee started a blog to interview fellow staff about their experiences, he made sure to always include a question about whether employees were fairly compensated. Terran Mayr told him she “never made enough in one night to equal minimum wage,” and that Waffle House never compensated her up to the minimum wage when she didn't get enough tips. Brandi Thomas, a 23-year-old waitress, said she only “sometimes” received enough tips to make the full minimum wage, and Waffle House didn't compensate her when she didn't.

The techniques for wage theft are sometimes more sophisticated. "Patricia," a former Georgia Waffle House worker AlterNet interviewed, described how daylight savings time became a tool to keep workers at her franchise underpaid. “I worked on the night shift at Waffle House, from 9pm-7am. We clocked in and out with a time clock. When daylight savings time changed in the fall, and the clocks moved back, we worked 11 hours, but the computer only paid us for 10 hours. When I talked to people about it, they said management had said we would get the time back when the time changed the next time,” she explained.

"We needed the money then," Patricia continued. "And when the time changed again, we might not be working at Waffle House then, or might not be working that shift. I was working the night shift when the time changed. So we worked nine hours and the computer thought was 10 hours. So the central office sent a memo to our managers telling them to subtract an hour's pay from our paycheck. The hour or two before the end of our shift was busy, and we made a lot of our tips then. Sometimes we didn't have time to wash the dishes before the end of the shift, so we would have to work past the end of the shift to finish up the dishes. Near the end of my time there, management sent in people to 'help' us by waiting on the tables while we washed dishes. So they got the tips while we washed their dishes.”

Patricia no longer works at Waffle House, but her story describes the way the chain uses its arbitration agreement to protect itself from class action litigation.

Another former Georgia Waffle House employee, "Ann," described to AlterNet one of the chain's most-hated policies. While some restaurants offer free meals for employees, workers at the Waffle House are actually charged $4 per shift for a meal—whether they eat a meal or not. “I got charged for food even if I didn't eat,” explains Ann, who was 21 years old while working at her location. That is, when she was working. Ann's manager would come in “yelling at workers in front of customers about what needs to be done and sometimes it would bring tears to the girls I worked with like we were his slaves. He even called me one day after I got off, fussing about the waffle iron spray because it fell underneath where I couldn't reach and he was mad about food cost.”

Ann lost her job when she was ill one day, and her boyfriend called in to say she was sick and couldn't come in. The manager told her boyfriend that if Ann didn't come in to work she would be fired. That was her last day on the job.

While Waffle House keeps its restaurants open in the worst weather, without regard for the well-being of its employees. When a massive ice storm hit Atlanta in 2011, shutting down the city's bus lines and mail service, Waffle House boasted that “we never closed a single restaurant. Our associates showed up for their shifts,” in the words of executive vice president Dave Rickell. The Federal Emergency Management Agency jokes that if the Waffle Houses in a disaster area are closed, the emergency is especially severe. "If you get there and the Waffle House is closed?" FEMA administrator Craig Fugate once said. "That's really bad."

Funding Republicans, Backing Right-Wing Agenda

While Waffle House has built up its business on the backs of an abused workforce, it has also worked simultaneously to bolster Republicans who would foster a policy climate even more conducive to driving down wages and benefits. When Karl Rove started up American Crossroads, the Super PAC he founded to unseat President Barack Obama, Waffle House was one of the first corporations to contribute, writing a $100,000 check to Rove's organization. It also gifted $50,000 to Restore Our Future, the pro-Romney Super PAC.

Most of the company's political giving has largely focused on Georgia. It has backed many in Georgia's congressional delegation, such as GOP Rep. Tom Price who is today the House of Representative's budget chief. Price, as well as all of the other House Republicans Waffle House backed, voted against an amendment to limit government contracts from companies that engage in wage theft. In other words, Waffle House's men in Congress voted to ensure it would continue to receive taxpayer largesse even if it was ever taken to task by regulators for what appear to be widespread violations of wage laws.

One of Waffle House's own executives, a lawmaker in the Georgia State Senate, floated a bill that would crack down on workers' ability to protest the conditions they work under: Republican State Senator Don Balfour, a vice president at Waffle House and former treasurer of the short-lived WafflePAC, introduced a bill that would have banned workers from picketing outside the homes of company executives. Despite vigorous protests from union activists, the bill passed the state senate and appeared to be on the verge of becoming law. Then something unexpected happened: tea partiers in the state, led by the eccentric Debbie Dooley, turned against the bill.

“This is not a right or left issue, it is a right or wrong issue. We may not agree with all of the politics...but we will defend their right to speak and protest, because this is America. If we destroy the First Amendment, we cease to be a free nation,” wrote the Atlanta Tea Party/Tea Party Patriots in an email to their constituents. Facing a backlash from both organized labor and the Tea Party, the bill was killed.

As for Balfour, he was indicted in 2013 on numerous charges of falsifying items in his legislative expense account but was later acquitted of the charges, maintaining his privileged position as a senior lawmaker.

Hitting the Limits

In June 2014, Raleigh Waffle House waitress Shaina Brown received a $1,000 tip from a generous customer. Waffle House refused to allow Brown to keep the tip, setting off a public relations firestorm. The customer returned and wrote Brown a personal check for $1,000 and Waffle House wrote a public apology on its Facebook wall to both Brown and the customer.

This incident shows that there are limits that even Waffle House can hit. Its abuse of workers and embrace of anti-worker politics cannot go on forever; when the abuses are exposed, the public's anger overrides the chain's anti-employee ideology. Just as public outrage made sure Shaina Brown was able to keep her tip, public anger could dismantle the chain of anti-worker policies, wage theft and political ideology that keeps the Waffle House workforce under-paid and abused.

Zaid Jilani is an AlterNet staff writer. Follow @zaidjilani on Twitter.

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