Subway manager accused of stiffing workers out of $38M will leave company

A regional manager and large Subway franchisee who allegedly stiffed workers out of $38 million has now left the company — which for years turned a blind eye to his actions.

The news comes a month after The Post revealed the chain was standing behind the manager who oversees roughly a thousand Northern California restaurants despite claims in court documents that he underpaid nearly 3,000 workers.

The manager, Chirayu Patel, now says he is leaving the company on Nov. 17 to spend more time with his family, according to a message sent to the restaurants he oversees that was seen by The Post. He will still own about 15 restaurants as a franchisee, but will no longer work for the company’s corporate office.

“Last year despite all the challenges we faced in our industry it was eye opening for me,” he said in the email. “It showed me the importance of being a good father and nothing should be more important than family.”

“Now I can finally spend more evenings home and hopefully learn to play some golf,” he said in the email.

There is likely more to the situation, sources close to Subway told The Post. Patel settled the workers’ lawsuit over the summer.

“As soon he settled his suit for $38 million in unpaid wages, he’s out,” said a source close to the matter, speculating on whether Patel left on his own accord. Subway corporate wasn’t named in the suit, but execs at the Connecticut-based firm might have been worried keeping Patel on staff would be a liability, according to the source.

Patel claimed he couldn’t afford to pay the workers any more than the settlement that was reached July 30: It amounted to $188 per worker, or $550,000, according to court filings.

He allegedly stiffed 2,918 workers at many of the Subways he owned out of overtime pay, other hours they worked and meal or rest periods, the lawsuit claimed. At one time, he owned up to 70 Subway restaurants in Northern California, but now is down to roughly 15.

Patel is keeping his own restaurants, but is losing the territory he manages for Subway as a so-called development agent in which he was getting a cut of all sales. Headquarters uses the agents to sell franchises in a given territory and to oversee compliance with corporate standards.

It isn’t clear whether Patel was paid anything by Subway to give up his territory.

Doctor’s Associates, Subway’s parent company, had been aware of the suit since at least 2018, sources close to the situation said. Leaders there seemingly did nothing. CEO John Chidsey — who used to run Burger King — has been trying to turn around a sales slump since his arrival in 2019. The company has said a recent menu revamp is helping.

Subway didn’t return a request from The Post for comment. A company spokesman on Thursday told Restaurant Business: “We can confirm that the territory in Northern California is transitioning to another business development group. As the transition is ongoing, we are unable to share additional details at this time.”

Patel told The Post last month: “We have always practiced business to the highest Subway standards and in accordance with state laws.” He declined to comment further.

It’s not the first time Subway has found itself facing alleged labor violations: The US Department of Labor in 2013 reportedly teamed with Subway to strengthen its compliance efforts after spotting thousands of violations.

The Labor Department from 2000 to 2013 found 17,000 Fair Labor Standards Act violations at Subway restaurants — more than any other national chain, according to a CNN report at the time.

Patel, meanwhile, was accused of forcing restaurants he managed out of business in a 2019 New York Times story.

Patel allegedly sent his own inspectors to certain restaurants that were competing with him — or that he wanted to buy — to find problems so he could force them out of business. Violations allegedly included minor infractions like finding handprints on glass doors or cucumber slices that were a bit too thick.

Patel in his email to franchisees about leaving said, “I had one goal from day one, I wanted all owners to succeed as without your success I could not have fulfilled my role.”

“We might have had occasional disagreements but in the end a majority of us came together to improve the brand we love. I am really proud of the team we were able to put together and how it became one large family.”

Patel also praised Subway co-founder Fred DeLuca, who died in 2015.

“Lastly we all need to thank Fred for the brand he created for us.  We might have not agreed on everything Fred had done, but he truly created the American dream for many of us.”