Department of Labor obtains injunction against Subway franchise in Sonoma County amid investigation

The U.S. Department of Labor has obtained a preliminary federal court injunction forbidding the operator of 14 Bay Area Subway sandwich shops — including six in Sonoma County — from violating child labor laws, threatening and retaliating against workers, and obstructing a federal investigation.

The Labor Department’s action against John Michael Meza and his corporations, Crave Brands LLC and MZS Enterprises LLC, was granted by Judge Vince Chhabria of the U.S. District Court for the Northern District of California on May 19.

The injunction, announced by the agency Thursday, follows a March Press Democrat investigation into allegations of wage theft and unsafe working conditions at the local restaurants.

“Our investigators learned this Subway franchisee directed young teenagers to operate ovens, toasters, cardboard balers and other equipment, all of which are considered dangerous jobs,” Assistant District Director Alberto Raymond of the department’s Wage and Hour Division said in the agency’s announcement.

“The court has ordered the employer to stop jeopardizing the safety and well-being of minor-aged workers, to pay workers as the law requires and to ensure that workers can participate in our investigation without fear.”

The Press Democrat’s initial reporting detailed allegations by local teenagers that Meza and his companies failed to pay employees on time, bounced checks, illegally withheld tips, denied bathroom breaks and forced workers as young as 15 to work alone at three restaurants in Petaluma and one each in Santa Rosa, Windsor and Cotati.

The Department of Labor’s announcement confirmed those accusations, and added others.

Raymond’s division cited Meza for numerous violations of the Fair Labor Standards Act related to the payment of wages, child labor, record keeping, retaliation against employees and obstruction of a federal investigation.

The agency said Meza and his companies owed $265,294 in outstanding wages.

“I think it’s good, because they’re getting what they deserve,” said Yanelli Vargas, one of the students at San Antonio High School in Petaluma who spoke to The Press Democrat in March. “It’s not fair what they’re doing to people. The karma came back to them.”

The timing of the federal agency’s announcement couldn’t be better, according to Sonoma County District Attorney Carla Rodriguez. Her office has set up a hotline for county residents to report wage theft: 1-833-88WAGES. It goes live Friday.

Rodriguez’s office is still evaluating a potential case against Meza and his companies, she said.

“I don’t think we are precluded from pursuing this criminally, but we need to find out more information to see what exactly state and federal agencies have filed before we make a determination on whether we file criminal charges — and assuming there was a crime, of course,” Rodriguez said.

A bill signed into law by California Gov. Gavin Newsom in September 2021 defined wage theft of more than $950 from any one employee in a 12-month period, or $2,350 from multiple employees, a grand theft.

The injunction against Meza indicates the government’s interest in making sure he and his associates don’t hide assets that might be used to pay wage-theft victims. They are prohibited from moving funds outside of paying necessary business expenses, and they must notify the Department of Labor regarding the sale of any real estate properties.

Meza’s wife, Jessica Meza, is listed as owner of a 4,400-square-foot house in Brentwood, in Contra Costa County. In 2022, it was assessed at $1.3 million.

In 2011, John Meza was sentenced in Contra Costa County Superior Court to 120 days in jail and $163,000 in fines for two felony counts related to tax evasion. He and Jessica were accused of failing to pay taxes on $800,000 in income, and opening a bank account using fake Social Security numbers to hide earnings.

With the current investigation, the Wage and Hour Division alleges that Meza interfered with its investigation by coercing employees not to cooperate with investigators, and threatening children who raised concerns or tried to exercise their legal rights.

During their review, federal investigators determined several Subway workers had suffered burns and other injuries.

The injunction also names Jessica Meza and associate Hamza Ayesh, who acted as the primary business contact for employees. The teenagers interviewed by The Press Democrat knew him as Mike Ayesh.

Their other Subway franchises, according to the Labor Department, are in Napa (where they have three), Vallejo, San Pablo, Concord, Antioch and Clayton.

The court ordered the defendants to stop issuing checks from accounts with insufficient funds or from non-payroll accounts. They are required to submit substantial paperwork within three weeks, including the following items, all for the period of Aug. 1, 2019 through May 19, 2023:

• A list of known contact information and dates of birth for all employees who worked at any of defendants’ store locations.
• Copies’ of all employees’ earning statements.
• Employees’ clock-in and clock-out dates and times, itemized by store location.
• All end-of-day gross sales and tip information, itemized by store location.

According to the Labor Department, Meza and his associates must also provide an accounting of all bounced checks from Aug. 1, 2019, to May 19, 2023, to allow the Wage and Hour Division to calculate funds owed to affected employees — including any bank fees incurred for the failed transactions.

The federal department will go beyond company records to identify aggrieved employees, according to a representative in their San Francisco office.

“That could include confidential interviews with workers, surveillance, third party subpoenas to banks or other entities, and other fact finding needed to identify all impacted workers,” he wrote in an email.

The Labor Department has the ability to assess civil penalties, he added. “Employees owed back wages are also entitled to an equal amount in (additional) damages, which the Department would seek to recover on their behalf along with the back wages.”

Meza has upset more than his employees.

Rajesh Gupta told The Press Democrat he and his wife, Maribeth, sold the Clayton Subway franchise to Meza in October 2021. It was a distress sale, for a price of $40,000. After paying $20,000, Gupta said, Meza went silent. Gupta won a judgment in small claims court, but has been unable to retrieve what he is owed.

“I don’t have any money in the bank,” Gupta said. “That money, I would have used to pay my mortgages. He has no consideration that somebody was in need of this money. He doesn’t care if people live or die.“

Meanwhile, some former Subway employees are wondering if the injunction will ultimately have teeth.

“I think it’s good they’re going after them, but I think just paying back people what they’re owed is the bare minimum of what they should do,” said Sam Brockett, 19, who worked at the Subway location in Windsor for three weeks, earlier this year. “It’s been three months now, and I haven’t received a single cent.”

Brockett lives with his parents in Windsor but tries to help pay for food and other necessities. He only recently was able to find another job, he said, at Applebee’s.

“I think for people who were promised money, either in bonuses that were not paid, or wages, there’s been time where you’re not getting any income, and it’s been difficult,” he said. “Maybe some extra compensation is in order.”

Vargas and her friends at San Antonio High, Lorenza Tapia and Alessandra Chavez, said they’re proud to have helped spark this investigation. They benefited from a $4,525 GoFundMe account started by their teacher, Eric Smith, in response to offers from the community — a fund greater than the $3,800 they were owed by Subway. Still, they’re waiting to see if the government follows through on bringing Meza to justice.

“To be honest, I don’t know,” Vargas said. “They might be really doing something, or they might be saying, ‘yeah, we’re helping’ to look like the hero.”

You can reach Phil Barber at 707-521-5263 or phil.barber@pressdemocrat.com. On Twitter @Skinny_Post.