Lawsuit Against Domino's for Failing to Reimburse Drivers

Pizza Shop Talk Delivery Driver Discussion
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Nichols Kaster, PLLP Brings Lawsuit Against Domino’s Pizza for Failing to Reimburse Drivers for Travel Expenses

MINNEAPOLIS, MN–(Marketwire - March 6, 2009) - On March 4, 2009, two former employees of Domino’s Pizza, LLC filed a class action lawsuit in the Federal District Court for the District of Minnesota. The lawsuit alleges that Domino’s violated state and federal law by failing to reimburse employees for expenses they incurred while delivering pizzas. Under Minnesota law, employers have to reimburse employees for their travel expenses. According to the lawsuit, Domino’s failed to adequately reimburse its drivers, instead paying a ‘per delivery’ amount which was not sufficient to cover drivers’ actual costs.

The lawsuit also involves minimum wage claims. Under both Minnesota law and the federal Fair Labor Standards Act, all employees are entitled to be paid the minimum wage “free and clear” of obligations to their employer. The lawsuit alleges that by requiring pizza delivery drivers to pay for their own automobile expenses, Domino’s also failed to pay their drivers the minimum wage.

Plaintiff’s attorney E. Michelle Drake explained, “The lawsuit alleges that Domino’s required employees to subsidize their business by paying for their own automobile and gas expenses. Minnesota law forbids employers from requiring employees to pay these kinds of expenses. What makes this situation even more egregious is that many Domino’s drivers were only supposed to be paid the minimum wage in the first place. In reality, Domino’s drivers were paid even less than the minimum wage because they had to pay travel expenses out of their own pockets.” Drake continued, "One of the reasons the law exists is to prevent companies like Domino’s from using employees’ money to subsidize their cost of doing business. We hope to recover the money that rightfully belongs to the employees."

Plaintiffs are represented by E. Michelle Drake and Paul J. Lukas from the law firm of Nichols Kaster, PLLP. Nichols Kaster has offices in Minneapolis, Minnesota and San Francisco, California.

Individuals may find information about joining this action at www.nka.com or by calling (612) 256-3200.

How big will this snowball get? :smiley:

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Re: Lawsuit Against Domino’s for Failing to Reimburse Driver

Good chance that it’ll melt. But it’ll be interesting to see the outcome.

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Really? Why is that?

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Because you are not the judge and jury and there will be many more facts of law presented prior to this snowballing or melting than this 5 paragraph article states.

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Your given reasons do not seem to favor an outcome in either direction. What reasons do you think favor an outcome in favor of Dominos?

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I believe their is probably a lot of merit to this case.

I know for a fact that more than a few Domino’s (corporate and franchise owned) have dramatically changed the way they compensate their drivers over the past 6 months or so. They began paying by the mile and paying different rates on time spent specifically on runs and when not on runs.

I was wondering why they made those changes - they obviously knew something was coming…

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I don’t necessarily favor an outcome for Domino’s, just don’t see think two allegations in a lawsuit warrants preparation for a good snowball fight. For the sake of this discussion I will list some reasons I think this may not snowball.

First off, Domino’s may not be doing anything illegal. I for one have no knowledge of Domino’s pay structure in Minnesota. I am very interested to see a verdict in this case.

In order for this to snowball it would seem that more than two people would have to jump on board. Now I’ve seen over the years how you and a few others can get people riled up in TTPG, but most never lift a finger outside of TTPG to make a change. Are there enough Domino’s drivers in Minnesota or anywhere else who give a $hit enough to make anything more than a snowflake or two?

Now if this comes down to the argument that their per delivery pay doesn’t pay as much as it costs to operate a vehicle, I believe there will need to be more information of what it costs to operate those vehicles than the IRS allowable deductible mileage rate. If you are arguing that it costs more than $1.00 per delivery(or whatever Domino’s pays) your argument in my mind should be based on more than “because the IRS says so”. So how many of the drivers who are interested in joining this class action lawsuit do you think have the supporting documentation showing they were not reimbursed enough to cover their actual costs? Do you?

Now how long do you think this law firm will hold interest in this case? Lets suppose they are much more successful than I think they will be and they sign up 100 of the current 1200(my estimation) of Minnesotas current Dominos drivers and 100 former ones. Using your numbers of “losing” $7000 in a year of pizza delivery, is this really enough to keep a nationwide employment law firm interested. My guess is unless they can find a way to push a verdict to the tens of millions or even the hundreds of millions, they will lose interest quickly and will push to settle.

And how long will the class being represented hold interest in this case. Using the example above half of the class is no longer working with Domino’s and if they have moved on to a better career, the more time that goes by the less they care. Same is true for the current employees, the more time that passes, the less likely they are still working for Domino’s and the less likely that they still care.

Now what if Domino’s offers to settle this case before it gets very far for a couple grand per person that joins the class action and pay the lawyers their fees in return for a hush clause? How large of a snowball would you deem that?

In short this is not the first lawsuit of this type that has gotten you excited. Most of these have ended in a puddle as opposed to a snowball so that’s why I’m not expecting a huge snowball in this case.

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Its hard to be specific without (as Paul says) knowing the exact details of how these guys were paid (or not).

However, Gregster, you continue to pin YOUR case on the IRS mileage rate which YOU believe (as do many on TTPG) that this is THE RATE at which you MUST be remunerated. The IRS website clearly states:

‘The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.’

‘Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes’

These quotes come from: http://www.irs.gov/newsroom/article/0,id=184163,00.html

The IRS website has plenty of pages on this subject but I have yet to find anywhere which states that business MUST remunerate at this level. A key word in this text is BENCHMARK. I would think that it DP was to ‘benchmark’ its drivers car then they may well fall into a lower level than say the federal governments car park.

IF this argument is specifically around mileage then maybe this case will help clarify.

IMO Domino’s will either argue that a) they do pay at rate or b) that it is not appropriate to pay at this rate.

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If the business does not want the hassle of actually collecting, calculating, and documenting all of the expense paperwork needed to pay ‘actual costs’, what other rate (besides the IRS rate which is currently recommended by the DOL) is fair and equitable? What would it be based on?

If the IRS rate is legal for taxes, why isn’t it legal for minimum wage calculations?

I’m confidant that the IRS standard rate has been held up in many if not hundreds of IRS tax cases, why wouldn’t it hold up in a DOL/FLSA Minimum Wage case?

My money is on this being settled out of court with ‘non disclosure’ clauses attached. It is becoming clear to me that corporate pizza never wants to see a court rule on the minimum wage/mileage issue. It is probably far cheaper to pay hundreds of settlements than to pay tens of thousands of drivers fairly.

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I have not heard of any of that, can you elaborate? Which stores where have raised mileage? Are you saying that they are paying tip credit wages while on the road, and full min wage while in the store?

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Re: Lawsuit Against Domino’s for Failing to Reimburse Driver

I’m not going to mention specific stores. The stores I’m talking about have done 2 things. As you mention, they went to paying tip credit wages while on the road and min wage (or more) while in the store. Secondly, they’ve switched to a cents per actual mile driven compensation method instead of a flat rate method. I can tell you the ones I know the most about are not paying anything near 55 cents per mile though.

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Nor do I think they have to. 55 cents is for IRS deductions and is very generous. They could, and should, expect their delivery drivers to drive older, less expensive vehicles.

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Just BECAUSE the IRS rate CAN be used to pay mileage (remembering the purpose of this rate is compute the deductible costs of operating an automobile for business use for tax purposes) doesn’t mean that it HAS to be used or that it SHOULD be used. I CAN pay drivers much more than this but that doesn’t mean I have to.

If this was such a good thing then why wouldn’t it be MW law?

I can calculate lots of tax deductions for my business using different forumulae but often these have little or no direct link to the actual costs associated the associated costs.

As I say maybe this will clarify.

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I saw a dominos guy the other day in a brand new infiniti g35. Obviously can’t afford to make his massive payments, all while heavily depreciating his brand new $40,000 car…

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I have seen some bizarre stuff too. My response to him would be that we pay so many cents per mile that is sufficient for a vehicle necessary for the job. You want to wear out a new model luxury car, that’s your business. But I will not be obligated to pay you “actual” expenses when estimated ones are sufficient.

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Until a Judge says otherwise at least. :roll:

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http://www.paemploymentlawblog.com/2007 … sequences/

Posted on June 6, 2007 by Michael Moore
Wage and Hour Violations: What are the Consequences?

The Central Penn Business Journal’s Morning Roundup featured an Associated Press article entitled “Small Business Owners shouldn’t use interns as substitute employees”. This is the same issue that I commented on in my last posting, but it reminded me that I missed a chance to describe the ramifications of getting it wrong.

There are significant consequences for violating the Fair Labor Standards Act (FLSA) by incorrectly paying minimum wage or overtime. Fixing a violation may involve more than just paying the compensation that was owed.

For FLSA violations, an employee may recover both back pay and liquidated damages (which is a penalty equal to the amount of the back pay). The double damages recoverable by an employee give the FLSA some real teeth.

The FLSA may be enforced by either the Department of Labor or by a private lawsuit by an employee. Listed below are methods which the FLSA provides for recovering unpaid minimum and/or overtime wages:

(1) The Wage and Hour Division may supervise payment of back pay.

(2) The Secretary of Labor may bring suit for back wages and an equal amount as liquidated damages.

(3) An employee may file a private suit for back pay and an equal amount as liquidated damages, plus attorney’s fees and court costs.

(4) The Secretary of Labor may obtain an injunction to restrain any person from violating the FLSA, including the unlawful withholding of proper minimum wage and overtime pay.

An employee may not bring suit under the FLSA if he or she has been paid back wages under the supervision of the Wage and Hour Division or if the Secretary of Labor has already filed suit to recover the wages.

Generally, a two-year statute of limitations applies to the recovery of back pay. In the case of willful violations, a three-year statute of limitations applies. For repeated violations, the DOL may also impose an additional penalty of $1100 per violation.

The DOL lists of the Most Common Violations found in its Investigations, but, in my experience, penalties for wage and hour violations arise more commonly in the following situations:

· Misclassification of a nonexempt employee as exempt and the resulting failure to pay overtime.

· Misclassification of an employee as an independent contractor.

· Failure to pay employees for all “hours worked”.

· Miscalculation of Overtime.

· Docking exempt employee pay.

· Automatically deducting for meal times.

· Violations of Child Labor laws.

The financial impact of FLSA mistakes for one or two employees is not great. However, damages add up quickly when an employer is facing a potential back pay for a larger group of employees going back two years and then doubling the number for liquidated damages.

Sometimes examples can better make a point. Employers can mismanage lunch periods by automatically deducting 30 minutes a day from employees’ pay. Employees may later allege they are working through lunch. For a group of twenty such employees, who are paid $12.00 per hour and who work only 40 hours per week, the mismanaged 30 minute lunch yields 2 ½ hours of unpaid overtime each week. That’s fifteen dollars of unpaid overtime a week, for 52 weeks, for 2 years, for 20 employees or a total back pay of $31,200.00. Then the amount is doubled for a grand total of $62,400.00.

It doesn’t take much for small errors to grow into big numbers. Imagine how huge bigger numbers can get. Take a look at Wal-Mart that lost a lawsuit in Pennsylvania and was required to pay $78.5 million to over 187,000 employees for overtime pay miscalculations based on off the clock work during breaks.

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That’s right. I will go by case and administrative law, not gregster’s guesses.
:lol:

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Nice source there. :roll:

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From page 31 of the DOL Field Operations Handbook (FOH) chapter 30

http://www.dol.gov/esa/whd/FOH/FOH_Ch30.pdf

Car expenses - employee’s use personal car on employer’s business.

In some cases it is necessary to determine the costs involved when employees use their cars on their employer’s business in order to determine MW compliance. For example, car expenses are frequently an issue for delivery drivers employed by pizza or other carry-out type restaurants.
(a) As an enforcement policy, the Internal Revenue Service (IRS) standard business mileage rate found in IRS Publication 917, “Business Use of a Car” may be used (in lieu of actual costs and associated recordkeeping) to determine or evaluate the employer’s wage payment practices for FLSA purposes. The IRS standard business mileage rate (currently 28 cents per mile)(EDIT: Now it is 55 cents per mile as of Jan 1 2009) represents depreciation, maintenance and repairs, gasoline (including taxes), oil, insurance, and vehicle registration fees. In situations where the IRS rate changes during the investigation period, the applicable rates should be applied on a pro-rata basis.
(b) The IRS standard business mileage rate may be used in lieu of actual costs for FLSA purposes whether or not the employee will be able to take a deduction on his or her tax return for the business use of the employee‘s car.

Which part of the above is my “guess”? :roll: Looks like “administrative law” to me!