Under-reimbursement of pizza delivery drivers violates state and federal minimum wage laws – that’s the allegation in a Blanchard & Walker PLLC case recently certified for class action status in the Eastern District of Michigan (read the order here). The Blanchard & Walker firm, in cooperation with co-counsel from the Kansas based law firm Weinhaus & Potashnick, filed the federal court lawsuit against three Hungry Howie’s Franchise stores in 2016. By granting class status approval, the Court has now cleared the way to allow group (aka “class”) representation for over a hundred delivery drivers who worked at a trio of mid-Michigan Hungry Howie’s franchises since 2013.
The pizza delivery drivers in the lawsuit against Hungry Howie’s franchises allege they were underpaid – less than the state and federal minimum wage – once the cost of automobile maintenance and mileage expenses are taken into account. With the approval of class certification, all of the drivers in Defendants’ stores will soon get notice of their rights in the case. Unless they choose to “opt-out,” their rights will be determined in this litigation, at trial or a court approved settlement. Currently, the lawsuit covers drivers that worked at Hungry Howie’s franchises in Perry, St. John, Owosso, and Durand, Michigan. Although the plaintiffs’ lawyers are asking the Court to expand that coverage to additional stores.
How can under-reimbursing delivery drivers violate minimum wage laws?
In the Hungry Howie’s Class Action Lawsuit, records show many pizza delivery trips involve 5-10 miles of driving per trip, at a cost that could be more than 5 dollars in gas, wear-and-tear, and maintenance according to industry standards. For instance, the IRS standard rate established for 2017 estimates the cost at 53.5 cents/mile. But pizza drivers are reimbursed only a fraction of that cost – sometimes as little as 8 cents/mile. The IRS rate is one well-accepted benchmark, “based on an annual study of the fixed and variable costs of operating an automobile,” according to the IRS website.
So where does all the unreimbursed driver expense go? It goes directly into the pockets of the pizza franchises – and out of the pockets of delivery drivers. The problem arises because the defendants, like most service outfits, also attempt to trim their costs by taking the “tip credit.” The tip credit is a legal loophole that allows employers of tipped employees in the food service industry to pay a “sub-minimum” wage (often around three or four dollars per hour) and then claim a portion of the tips that employees receive as wages as if the company had paid them a full minimum wage directly (even though we know they didn’t). But even if the law considers the bare minimum wage to be paid, the failure to properly reimburse delivery driver expenses means that actual compensation falls far below that amount.
The Court has not yet ruled on the merits for the Hungry Howie’s delivery driver lawsuit. Nobody has ruled for the Plaintiffs or against the Defendants. As they say – the jury is still out. If you worked for Defendants at one of the subject stores you should await court approved notice and read and follow the instructions carefully. Sign up for posts or look for updates from the firm to get news. For other delivery drivers and food service workers in Michigan, you can look forward to Part Two of this post coming soon – discussing the general legal problems posed for employers claiming a “tip credit,” and the wage rights of service industry workers.