Pizza Hut Sued Over Alleged Delivery Reimbursement Underpayment

Adam Barker filed suit in the Southern District of Texas on Wednesday on behalf of himself and similarly situated persons. Barker alleged that the defendant, ITL Foods, LP (doing business as Pizza Hut), used a flawed method to calculate the rate at which they reimbursed employees like the plaintiff for their delivery costs.

The defendant operates various Pizza Huts, and therefore employs delivery drivers. The employees are said to be required to “maintain and pay for safe, legally-operable, and insured automobiles” as a part of their employment so that they can participate in deliveries. As an employee of the defendant, Barker’s primary duty is to deliver food to the home and workplaces of customers. The complaint asserts that instead of reimbursing their employees at a reasonable rate for their automobile expenses, the defendant used a flawed method to determine the compensation. The method they used “neither reimburses the drivers for their actual expenses, not at the IRS business mileage rate.”

The complaint argued that the IRS rate is a reasonable approximation that is legally required for employers to provide their employees when they use their personal vehicles for work purposes. The defendant operated on a tip credit system, meaning the drivers received an hourly wage below minimum wage which was supplemented by their earned tips. However, the plaintiff asserts that they consistently “failed to earn enough in tips to make up the difference between their cash wage and the federal minimum wage, causing their wages to fall below the federal minimum wage during one or more weeks.”

The complaint also cited the Department of Labor Field Operations Handbook, which specifies that employers are required to either track the actual expenses and reimburse accordingly, or they must follow the IRS business mileage reimbursement rate. The plaintiff asserts that the defendant has done neither, rendering their automobile reimbursement policy flawed. The costs associated with delivery and vehicle maintenance include “gasoline, vehicle parts and fluids, repair and maintenance services, insurance, depreciation, and other expenses.”

Barker explains that the defendant’s unlawful reimbursement policy has been a “frequent complaint of Defendant’s delivery drivers, which resulted in discussions with management, yet Defendant continued to reimburse at a rate much less than any reasonable approximation of delivery drivers’ automobile expenses.” The plaintiff is alleging that the defendant violated the Fair Labor Standards Act, or FLSA. Barker is seeking to recover compensatory damages, liquidated damages, costs of litigation, pre and post-judgment interest, and other relief deemed equitable by the court.

The plaintiff is represented by Josephson Dunlap LLP.