San Diego County is suing a major sushi supplier that operates in the region’s largest supermarket chains and specialty stores throughout California, alleging that it classifies sushi chefs as independent contractors, resulting in low pay and multiple labor law violations.In a newly filed lawsuit, obtained by Times of San Diego, the county, on behalf of the People of the State of California, sued ACE Sushi and several related businesses for using America’s craving for fresh sushi to take advantage of hundreds of sushi chefs in San Diego County and beyond, all while making hundreds of millions in profit.“Since 2020, grocery store sushi sales have risen over 60% to more than $2.5 billion,” reads the lawsuit. “Sushi is one of the fastest-growing fresh food items sold in many of the nation’s largest grocery store chains, including Albertsons, Ralphs, Kroger, Smart & Final, Stater Brothers, Costco, and WinCo.”Attorneys for the county say ACE and its affiliates have entered into agreements with supermarkets and other retailers to offer grab-and-go, packaged sushi inside deli sections and on end caps. The sushi companies enter into employment contracts with sushi chefs to prepare the sushi and other products inside the store and keep the section stocked.In addition to preparing sushi at the stores, the lawsuit alleges ACE Sushi requires its “franchisees” to participate in promotions, and in some cases, deliver sushi. The chefs are paid by commission on the number of products that are sold, not the hours they work.And while the arrangement appears reasonable, county attorneys say it is anything but for the chefs and, in many cases, the family members the chefs have helping them meet the requirements from the companies. “Often, the so-called franchisee is the sushi chef who toils every day performing the work necessary to fulfill [ACE’s] contractual obligations to grocery retailers, all under [ACE’s] direction and control. These ‘franchises’ are truly sham arrangements under which sushi chefs pay to work while Defendants evade numerous labor laws.”The contracts, according to the lawsuit, require chefs to rent equipment, food costs and franchise fees.Reads the lawsuit, “Through this misclassification scheme, [the companies] have avoided paying state and local minimum wages, overtime, paid sick leave, workers’ compensation coverage, reimbursable business expenses, and unemployment insurance, and providing meal and rest breaks. Meanwhile, [they] shift the burden of normal business expenses and losses to the sushi chefs, including transportation costs, equipment, supplies, food ingredients, packaging, uniforms, and losses due to theft or spoilage.”ACE Sushi did not respond to Times of San Diego’s request for comment.
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