Dive Brief:

• Domino's Pizza stores owned and operated by Team Carolinas and Osman Qasim in North and South Carolina will pay $3 million to settle wage and hour claims brought by delivery drivers (Huffman v. Team Carolinas, Inc., et al., No. 4:19-cv-00034 (D.N.C., March 3, 2021)).
• The plaintiffs claimed that the defendant paid them at or close to minimum wage while requiring the drivers to pay for their own delivery expenses such as vehicle maintenance and insurance but did not reimburse them for those costs.
• The plaintiffs claimed violation of the Fair Labor Standards Act and North Carolina and South Carolina law.

Dive Insight:

Illinois Domino's franchises settled similar claims for about $800,000 in October 2019. The drivers alleged they were under-reimbursed for the costs of driving their cars for work. They also claimed their employer improperly claimed a tip credit against their wages and deducted the costs of their uniforms from their pay.

To satisfy FLSA requirements, employers can reimburse delivery drivers a "reasonable approximation of expenses incurred for the employer's benefit rather than the actual amount of expenses incurred” when employees use their personal vehicles to make deliveries, the U.S. Department of Labor said in an August 2020 opinion letter.

The federal agency also said that employers are not required to use the IRS' standard mileage rates to calculate an employee's expenses and that it "neither approves nor disapproves" certain other methods for doing so. Fixed vehicle expenses such as license fees, registration fees and insurance costs should be reimbursed only to the extent that the employee uses the vehicle for the benefit of his or her employer, the agency noted.

Employers may need to exercise caution, however, when relying on opinion letters as they are fact-specific, attorneys have warned.