Pizza Hut Franchisee Pays $4.75M to Settle FLSA Dispute

A franchise that owns more than 300 Pizza Hut locations across the nation and the former owner of the business has agreed to pay $4,750,000 to resolve delivery drivers class-action lawsuit alleging the franchise and its former operator violated the Fair Labor Standards Act. A Georgia delivery driver filed his lawsuit in April of 2023 alleging the franchise did not reimburse delivery drivers for their actual automobile-related expenses, or use the IRS standard business mileage rate but rather, used the per delivery reimbursement rate that fell below the IRS rate.

The Pizza Hut drivers who were paid minimum wage, slightly above minimum wage, or minimum wage minus a tip credit, alleged they were actually deprived of the minimum wage guaranteed by the Fair Labor Standards Act due to the required purchase of gas, vehicle parts and repair, car insurance, cell phone plans and other out of pocket expenses, according to the complaint.

The Georgia worker filed a lawsuit after a similar lawsuit was filed in Minnesota by an employee who made a similar complaint against the company. However that court limited the scope of that case to Minnesota drivers.

The Georgia class-action lawsuit, on the other hand, includes drivers nationwide and is currently representing more than 1000 drivers in the class from Florida, Georgia, New Mexico, North Carolina, South Carolina, Texas, Virginia, and Wisconsin.

The settlement agreement, which was filed on October 18, seeks to resolve both class action lawsuits. Drivers who worked for the franchise at 321 locations in the states mentioned above between June 21, 2019, and September 27, 2021, and have already opted in will receive a final payment from the $4.75 million fund. It is meant to cover reimbursements, unpaid wages, liquidated damages, and other fees.

Thousands of more drivers could be added to the class if they opt into the settlement according to court documents. This lawsuit is the latest action in a long-running legal battle. Since delivery drivers are often required to use their own vehicles, they have at various times alleged violations of the Fair Labor Standards Act. The courts have split on how to address these questions however.

In a joint opinion in March, the 6th US Circuit Court of Appeals vacated two District Court decisions, one in Michigan and another in Ohio. In the Michigan case, the court agreed with drivers that they should be reimbursed using the IRS rate, while in Ohio, the court sided with the employer finding that a reasonable approximation of drivers cost would be sufficient. The appeals court disagreed with both courts, finding that the IRS standard rate was imperfect and tended to overpay in states with low gas with low gas taxes and underpaying states with high gas taxes. The court further found that the reasonable approximation method also underpaid delivery drivers in violation of the FLSA. The 6th Circuit found that if an employer requires a minimum wage employee to provide his own tools for work, the employer must reimburse him for 100% of the cost of doing so.

Talk to an Atlanta FLSA attorney today 

Are you being denied overtime or otherwise shortchanged by your employer? Call the Atlanta employment lawyers at The Forsythe Law Firm, LLC to discuss the matter with a seasoned professional. We may be able to recover back wages and liquidated damages from your employer and reimburse you for the cost of your labor. Call our office today to learn more.

Source:

hrdive.com/news/pizza-hut-franchisee-settles-delivery-driver-flsa-dispute-for-4-million-muy-pizza-tejas/730619/