Bay Area Subway franchisee fined $1 million, ordered to sell businesses after wage theft investigation

The U.S. District Court for the Northern District of California has ordered the owners and operators of 14 Bay Area Subway restaurants, including six in Sonoma County and three in Napa, to pay employees nearly $1 million in back wages and damages.

In a rare action, the consent order — meaning all parties agree to its directives — also requires the owners to sell or shut down their businesses by Nov. 27, a term the U.S. Department of Labor said it insisted upon to resolve the case.

The actions against John Meza and his wife, Jessica Meza, follow a Press Democrat investigation that revealed a long trail of abuses by the Subway franchisees.

Federal investigators confirmed much of the reporting, finding that the Mezas directed children as young as 14 and 15 to use dangerous equipment and assigned minors to work hours not permitted by law; failed to pay employees their wages regularly, including by issuing them hundreds of bad checks; and illegally kept tips left by customers.

“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,” Ruben Rosalez, the department’s wage and hour regional administrator in San Francisco, said in a statement.

One of those young people sounded satisfied to hear the news.

“Honestly, I’m just grateful something has actually been done,” said Lorenza Tapia, one of three students at San Antonio High School in Petaluma who first spoke to The Press Democrat about their troubling experience working at local Subways. “People haven’t been paid their money. This feels pretty good.”

A year after her last day punching out at Subway, Tapia is still trying to make sense of her treatment there. She went to work at 15 to help support her single mother and three younger siblings.

“Who wants to take advantage of a kid like that, who is trying to work hard, out there trying to do something?” she asked Friday. “Studying and working is pretty hard.”

The consent judgment and permanent injunction, signed by U.S. District Court Judge Vince Chhabria on Wednesday, orders the Mezas and their limited liability corporations, Crave Brands and MZS Enterprises, to pay 184 workers a total of $475,000 in minimum wage, overtime and tips, and an equal amount in liquidated damages. The agreement also stipulates they must pay $150,000 in penalties.

Investigators found the employers interfered with the Wage and Hours Division’s review by coercing employees not to cooperate, and by threatening children who raised concerns or tried to exercise their legal rights. The Mezas and their site manager, Hamza “Mike” Ayesh, are ordered to pay $12,000 in punitive damages for threatening at least one employee who had complained about a payroll check bouncing.

John Meza, Jessica Meza and Mike Ayesh did not respond Friday to requests for comment.

The money owed by the defendants will begin accruing interest at an annual rate of 10% beginning Sept. 27, 2024. Any proceeds for the Mezas from a business sale under the order must be forwarded to the Department of Labor.

How much money eventually winds up in the hands of the affected teenagers and young adults, many of them immigrants or the children of immigrants, remains to be seen.

“Any payments will be subject to my client’s ability to pay, which is quite modest for the foreseeable future,” Arkady Itkin, the defendants’ attorney, said in an email.

It is noted in the judgment that the Mezas and Ayesh have asserted “under penalty of perjury that they, collectively, cannot produce more than $12,000 in cash funds as of September 25, 2023.”

Under the agreement, the Mezas cannot open another Subway franchise or other food franchise for three years.

People directly impacted by the wage theft were pleased by that provision.

“Either way, if they have to close stores or give them up, that’s a big thing,” said Ein Hill, a Rohnert Park resident who worked at the Cotati Subway franchise for several months earlier this year and wound up being owed close to $4,000 in unpaid wages.

Hill, 21, said he did eventually receive a couple of checks that did not bounce, but they fell far short of what was owed to him. The experience has colored his view of employers.

“It’s nerve wracking anytime you’re gonna go work for someone,” he said. “You always worry it might happen again.”

Not long before the three San Antonio High students went to work for John Meza, three of his companies — Crave Brands, MZS Enterprises and Apex Brands — received just under $190,000 in federal pandemic-era loans, according to data from the U.S. Small Business Administration. That money was meant to keep employees in their jobs. About $66,000 of Meza’s Paycheck Protection Program debt was forgiven by the U.S. government.

In 2011, 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 Meza were accused of failing to report $800,000 in income, and opening a bank account using fake Social Security numbers to hide earnings.

If working for the Mezas and their company was a bitter introduction to the labor market for the affected teenagers, the Labor Department action was seen by some as a more satisfying lesson — in the power of self-advocacy.

“Even though they didn’t mention my name, I know deep down that thanks to something I said, it helped a lot of people,” Tapia said.

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