Domino’s admits drivers get NONE of the Delivery charge!

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PostPosted: Mon Mar 29, 2010 6:56 pm
Domino’s Delivery Case Challenges Employers
Posted by primerus on November 16, 2009 — By: Rachel Myers

http://www.primerus.com/news/resources_ ... employers/

Krass Monroe, P.A.

Minneapolis, MN

Are you, as a delivery business, adequately reimbursing your delivery drivers for the travel expenses they incur in making deliveries? Domino’s Pizza (“Domino’s”) was recently sued by a group of its current and former delivery drivers (“Drivers”) in Minnesota federal district court.[1] The Drivers primarily asserted that Domino’s failed to adequately reimburse them for their travel-related expenses, which resulted in the Drivers being paid less than the federal minimum wage and the Minnesota minimum wage. Because the Drivers’ allegations against Domino’s have legal implications that could affect your delivery businesses, here is a summary of the Drivers’ claims against Domino’s, the court’s treatment of those claims, and practical advice on how to ensure you are in compliance with both federal and state employment law.

1.Domino’s was not Entitled to Notice From its Drivers for Insufficient Reimbursement Before Claims Could be Asserted Against it.
Domino’s paid its Drivers a “flat rate” for reimbursement of the automobile expenses the Drivers incurred on a per delivery basis. The Drivers argued that the reimbursement was insufficient, and, as a result, Domino’s was paying its Drivers less than the statutory minimum wage in violation of the Fair Labor Standards Act (“FLSA”) and the Minnesota Fair Labor Standards Act (“MFLSA”). Domino’s argued that the Drivers should have been required to give Domino’s notice of the insufficient reimbursement or provide Domino’s with documentation that quantified their excess expenses before being able to file the lawsuit. However, the court determined that neither FLSA nor MFLSA required the Drivers to give Domino’s notice of their insufficient reimbursement and wages prior to filing suit.

Advice to Delivery Business Clients:

If you are paying your delivery drivers a flat rate for automobile expenses on a per delivery basis, you may not be sufficiently reimbursing your delivery drivers for the expenses they have actually incurred. As a result, you may be exposing yourself to potential claims for minimum wage violations under FLSA and your state’s employment laws. Since your delivery drivers are not required to give you notice of the allegedly insufficient reimbursement before pursuing federal claims (and possibly state claims) against you, it is important for you to be proactive. Talk to your delivery drivers, find out the actual amount of their automobile expenses, and set your flat rate at a level that adequately reimburses these expenses. To ensure your delivery drivers are being reimbursed for any expenses they incur above the flat rate, you may want to consider establishing a policy to allow for additional reimbursement. By requiring delivery drivers who claim expenses in excess of the flat rate to submit documentation quantifying these expenses, you can make sure your delivery drivers are being sufficiently reimbursed, and you can successfully avoid any potential claims for minimum wage violations.

1.Be Wary That the “Delivery Charge” Retained by Domino’s may be Considered a “Gratuity,” Which Belongs to the Drivers.
The Drivers also argued that they were not being paid minimum wage because Domino’s was unlawfully retaining the “delivery charge” that Domino’s itemizes on its receipts and charges to all pizza delivery customers. The Drivers argued that the “delivery charge” should belong to them because, under Minnesota law, employers are prohibited from requiring employees to contribute or share a “gratuity” with the employer. Domino’s argued that the “delivery charge” was not a “gratuity” under Minnesota law that belonged solely to the Drivers, but rather, was a “service charge” under federal law that belonged exclusively to Domino’s.

The court found that, if Domino’s was giving its customers sufficient notice that the “delivery charge” was being paid to Domino’s and not to the Drivers, Domino’s could lawfully retain the “delivery charge” under Minnesota law. However, without sufficient notice, the “delivery charge” would be considered a “gratuity” that Domino’s must pay to the Drivers, in addition to Minnesota’s mandatory minimum wage.[2]

Advice to Delivery Business Clients:

Look to the laws of the state(s) where your stores are located to determine how service charges are treated. Do service charges belong to the delivery drivers, or do they belong to you as the employer? Do customers have to be put on notice that certain charges are retained by you, rather than being paid to the delivery drivers, in order for you to lawfully retain the charges? If you want to retain service and delivery charges, it would be wise to include a statement on the receipt, stating that these charges will not be paid to the delivery drivers. This notice will put drivers and customers alike on notice that you will be the recipient of these charges, provided that your state’s laws do not designate service charges as belonging to the delivery drivers. Another question to ask is, can the employer’s payment of the service charge to the employee be used to satisfy the state’s minimum wage requirement, or is it a payment that must be made in addition to the state minimum wage? The answers to these questions are necessary to determine your obligations with respect to both state and federal minimum wage requirements.

1.Travel Expenses may be Included in the $50 Unreimbursed Deductions Limit.
The court left open the issue of whether the net effect of unreimbursed travel expenses could result in the Drivers’ wages falling below the minimum wage. The Drivers argued that they were being paid less than minimum wage because their travel expenses, which Domino’s failed to reimburse, exceeded $50. Under Minnesota law, the first $50 of employment-related expenses in a given pay period do not have to be reimbursed by the employer. Domino’s argued that “travel expenses” were not subject to the $50 threshold for “uniform or equipment,” and that, in any event, expenses from “a motor vehicle . . . which may be used outside the employment” were specifically excluded. The court found that, since the Drivers alleged that the lack of reimbursement for their travel expenses resulted in their wages falling below minimum wage, the Drivers were allowed to pursue their claim against Domino’s.

Advice to Delivery Business Clients:

While the courts have not finally decided the issue, be mindful of whether your drivers’ out-of-pocket employment-related expenses are causing their wages to fall below the minimum wage. Look to the employment laws of the state(s) where your stores are located to see if they have a dollar limitation similar to Minnesota’s $50 limitation on unreimbursed deductions. Make sure you are maintaining accurate records of your delivery drivers’ employment-related expenses you are not reimbursing, such as the costs of uniforms or specially-designed clothing, equipment, supplies, and travel expenses. While state law may not require you to maintain records of your delivery drivers’ actual travel expenses, it may still be worthwhile to do so. As noted in Section 1 above, paying your drivers’ travel expenses may make the most sense to protect against claims similar to the ones made against Domino’s.[3]

Contact your legal advisor to make sure you understand your legal obligations. By being aware of employment issues faced by other delivery businesses, you can successfully ensure you don’t drive employee wages below the minimum wage.

Rachel R. Myers is an attorney in the Litigation practice group at Krass Monroe, P.A. She can be reached at rmyers@krassmonroe.com.

For more information about Krass Monroe, P.A., visit http://www.krassmonroe.com/ or http://www.primerus.com/firms/Krass_Monroe.htm.

KM: 4823-0175-5396, v. 1




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[1] Luiken v. Domino’s Pizza, LLC, Civ. No. 09-516, 2009 U.S. Dist. LEXIS 66973 (D. Minn., Aug. 3, 2009).

[2] Similar to Minnesota law, New York law provides that service charges are gratuities, which belong to the employees and cannot be retained by the employer, if the customer reasonably expects that such charge will be paid to the employee. See N.Y. Labor Law § 196-d.

[3] You should also be mindful of tax implications when deciding how to pay your drivers’ travel expenses. Generally, reimbursement for travel expenses after they are incurred will likely not be considered income for the drivers and will not be taxable. However, payment of an allowance or a stipend for travel expenses before they are incurred will likely be deemed income for the drivers and will be taxable.
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PostPosted: Mon Mar 29, 2010 7:11 pm
From the above article:

Domino’s argued that the “delivery charge” was not a “gratuity” under Minnesota law that belonged solely to the Drivers, but rather, was a “service charge” under federal law that belonged exclusively to Domino’s.


This is PROOF that drivers get NONE of the Delivery charge!

The companies try to have drivers AND customers believe that drivers get some or all of the deliver charge... UNTIL drivers actually try to claim it! :roll:

THE DELIVERY CHARGE IS NOT A TIP.

DRIVERS GET NONE OF THE DELIVERY CHARGE.

The DELIVERY CHARGE is in fact a "SERVICE CHARGE" that the company keeps and even defends in court!

The DELIVERY CHARGE is just a hidden price increase that is almost never listed in advertisements or anywhere else that a customer might see it. It is never mentioned when placing an order by phone.


Please always remember to tip your driver at least $3 or 15%.
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PostPosted: Sun Sep 26, 2010 7:21 pm
I wouldn't say the charge is "never" mentioned on the phone. ;)

My employees and I tell every delivery customer: "Your total with tax and delivery charge is...."

For customers who ask (and there are many) we explain that the charge is not a tip, that it does not go to the driver. Instead, we tell them, it is a way for us to cover some of the increased costs of doing business without raising menu prices.

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PostPosted: Tue Jan 24, 2012 6:33 pm
At Pizza Hut, they also charge a $2.50 'convenience fee'.
we get a gas allowance that averages to about $1 per delivery.
Yeah, I know, not much.
I assume that the gas allowance and our 'salary' of $4.29 an hour, while on the road, are taken out of the 'convenience fee.'
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PostPosted: Tue Jan 24, 2012 9:26 pm
Drivers get NONE of the delivery charge! Ever! By law, it ALL belongs to the store.

Anyone who says that drivers get 'some' of the delivery charge only confuses customers and reduces tips.
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PostPosted: Tue Sep 04, 2012 1:21 pm
Domino’s paid its Drivers a “flat rate” for reimbursement of the automobile expenses the Drivers incurred on a per delivery basis. The Drivers argued that the reimbursement was insufficient, and, as a result, Domino’s was paying its Drivers less than the statutory minimum wage in violation of the Fair Labor Standards Act (“FLSA”) and the Minnesota Fair Labor Standards Act (“MFLSA”). Domino’s argued that the Drivers should have been required to give Domino’s notice of the insufficient reimbursement or provide Domino’s with documentation that quantified their excess expenses before being able to file the lawsuit. However, the court determined that neither FLSA nor MFLSA required the Drivers to give Domino’s notice of their insufficient reimbursement and wages prior to filing suit.


My favorite part. Domino's is arguing that it's unfair that drivers cheated out of minimum wage didn't notify Domino's that they were being cheated. "Hey, we didn't know we were underpaying our employees." ::wink wink::

Are you kidding me?
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PostPosted: Wed Sep 05, 2012 12:50 am
RoadKillDinner wrote:
Domino’s paid its Drivers a “flat rate” for reimbursement of the automobile expenses the Drivers incurred on a per delivery basis. The Drivers argued that the reimbursement was insufficient, and, as a result, Domino’s was paying its Drivers less than the statutory minimum wage in violation of the Fair Labor Standards Act (“FLSA”) and the Minnesota Fair Labor Standards Act (“MFLSA”). Domino’s argued that the Drivers should have been required to give Domino’s notice of the insufficient reimbursement or provide Domino’s with documentation that quantified their excess expenses before being able to file the lawsuit. However, the court determined that neither FLSA nor MFLSA required the Drivers to give Domino’s notice of their insufficient reimbursement and wages prior to filing suit.


My favorite part. Domino's is arguing that it's unfair that drivers cheated out of minimum wage didn't notify Domino's that they were being cheated. "Hey, we didn't know we were underpaying our employees." ::wink wink::

Are you kidding me?


Well they could NEVER say that about me as I have complained LOUDLY about our MR ($1 per delivery) for years now (again thanks to Greg and TTPG for the information).

All I ever got in return was a whlesale cop-out answer of: "Well you did sign a paper stating that you would only be paid XX cents per delivery when you were hired."

My answer was "Well to that point I did not have sufficient information to dispute that figure and figure in my base wage - the mileage that I am NOT being paid for to accurately know that I was getting screwed. Meaning the mileage that I am NOT being compensated for taken away from my base wages looks like I am getting paid under what I should be and all vehicle expenses but gas is being paid for straight out of my pocket."

When we went split wage a year ago the area manager "tried" to claim that we were actually being OVER COMPENSATED in MR. He tried to site some "study" they suppposedly did by taking a sample of all of our deliveries for some period of time ( I was never allowed to see the "study" so I can not verify how many runs or the length of time involved). I immediately disputed this with facts and figures from my own experience ie. 23 cents a mile on average MR from the company and the IRS suggested rate of (back then) 55.5 cents per mile and that I was loosing about 30 cents per mile in MR." He just sputtered and would not answer me nor look me in the eye.

It was then I knew why they split the driver meeting between the noobies and the vets. The noobies would just accept the mush they were being fed. The vets would not and some (like me and one or two others) woudl complain and dispute the mush.

ETA: added a few things


Armed with information from here and TTPG I have tried to educate the other drivers in my store but with little effect. There is only one other driver who, like me, acutally pays attention to how screwed we are. Most are, at best, appathetic.

I do however try to inform new drivers in the "ways of delivery" and tell them about increased car repair costs, insurance traps, low vehicle compensation,and the dangers of the job. I am very upfront with them and really pull no punches. In short I tell them the "truth" not feed them the cotton candy clouds and rainbow company line.

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PostPosted: Wed Sep 05, 2012 4:34 am
Isn't it sad that there are so many drivers that are apathetic about this issue? You tell them and tell them and they still don't seem to care that they are losing money. They don't care that their employer is effectively breaking the law, but will never be held accountable for it because the employees are too afraid to stand up for themselves.
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PostPosted: Wed Sep 05, 2012 4:47 am
Racket_Man wrote:All I ever got in return was a whlesale cop-out answer of: "Well you did sign a paper stating that you would only be paid XX cents per delivery when you were hired."


The laws requiring minimum wage (and the entire FLSA) are ‘statutory‘ and cannot be waived by the employee or the employer, even in writing.

In other words, even if you sign something saying you agree to it, it;s STILL illegal! (just like STATUTORY RAPE! :oops: :o :shock: )


Enforceable Waivers of Minimum Wage and Overtime Claims Must Have Court or DOL Supervision
Date: 1.11.2005

http://www.jacksonlewis.com/resources.php?NewsID=695

Employers attempting to incorporate a waiver of minimum wage and overtime claims as part of a settlement agreement must be mindful of a legal principle established by the U. S. Supreme Court in 1945. In Brooklyn Savings Bank v. O'Neill, 324 U.S. 697 (1945), the Court made clear that an employee cannot waive a minimum wage or overtime pay claim under the Fair Labor Standards Act unless the release is supervised by a court or by the U. S. Department of Labor.

To support its decision to disallow enforcement of a purported waiver of FLSA claims, the Court cited the legislative history of the FLSA and the congressional intent "to protect certain groups of the population from sub-standard wages and excessive hours … due to the unequal bargaining power as between employer and employee." The Court cited the statute's recognition of the need for "compulsory legislation to prevent private contracts … which endangered national health and efficiency and as a result the free movement of goods in interstate commerce." As the Court unequivocally stated, "No one can doubt but that to allow waiver of statutory wages by agreement would nullify the purposes of the Act." Brooklyn Savings Bank, 324 U.S. at 706-07.

Subsequent decisions have held that "private" settlement agreements addressing unpaid overtime or minimum wage claims also do not bar lawsuits seeking liquidated damages under the FLSA. In effect, an "unsupervised" settlement leaves the door open to subsequent FLSA claims.

This long-standing principle was reiterated and extended by a federal district court to encompass a state wage and hour law claim in O'Brien v. Encotech Constr. Serv. Inc., 183 F. Supp.2d 1047 (N.D. Ill. 2002). There, the court invalidated waiver agreements both under the Fair Labor Standards Act and Illinois law and permitted a class action to proceed. At first blush, the court had upheld the waiver under the Illinois Minimum Wage Law and the Illinois Wage Payment and Collect Act, since there was no evidence of fraud, duress, mutual mistake or unconscionability. However, upon reconsideration, the court reversed that ruling, finding that the public policy invalidating releases under the FLSA applied equally to the Illinois wage law claims.

Invalidating the releases, the district court judge found no anti-waiver provision similar to that in the federal FLSA in the Illinois law. However, the court stressed that in its attempted waiver agreement, the employer had made no effort to invoke the alternative dispute resolution and official supervision protections established by the federal law. On the contrary, the court pointed out the employer's release "denied liability and purports to offer 'some additional compensation' to enhance employees' job satisfaction. A private release in this context not only undermines the statutory goals involved but provides inadequate assurance that the practices giving rise to the dispute will be discontinued." O'Brien, 183 F. Supp.2d at 1050.

Accordingly, when seeking a waiver of potential claims under the FLSA, an employer must consider the statute's unique limitations upon settlement to obtain a binding release and waiver of claims. To discuss this and other wage and hour issues, please contact the Jackson Lewis attorney with whom you regularly work, or partners Paul J. Siegel or Richard I. Greenberg.
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PostPosted: Wed Sep 05, 2012 4:51 am
For those that hate reading all the "legal stuff": NO MATTER WHAT YOU SIGNED OR SAID. YOUR MINIMUM WAGE RIGHTS REMAIN IN EFFECT!
"If you ain't on the road, you ain't makin' money!" - gregster

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