- An operator of 16 Illinois Domino's franchises has agreed to pay $807,500 to settle wage and hour claims brought by a class of approximately 125 delivery drivers (Young v. Rolling in the Dough, Inc., No. 1:17-cv-7825 (N.D. Ill Oct. 9, 2019)).
- The drivers alleged they were under-reimbursed for the costs associated with driving their cars for work; that their employer failed to properly claim a tip credit for the drivers' wages; that they were paid a tipped wage rate while working in a non-tipped capacity inside the stores; and that deductions for the costs of uniforms and contributions to the Domino's Partners Foundation were improperly taken from their paychecks, causing their pay to drop below minimum wage.
- The court noted that the settlement amount is substantial, "[g]iven the number of complex and uncertain legal and factual issues in this matter." If all issues were decided in favor of the plaintiffs, said the court, they would have been entitled to more than $2,5 million.
This settlement highlights a number of topics that employers should be aware of, especially if they use independent contractors.
- Tip credit: The Fair Labor Standards Act (FLSA) allows an employer to take a tip credit toward its minimum wage obligation for tipped employees equal to the difference between the required cash wage (which must be at least $2.13, according to federal law) and the federal minimum wage. If an employee does both tipped and non-tipped work for an employer, certain rules apply. Also, it's important to note that those rules may soon change.
- Uniform deductions: The cost and maintenance of required uniforms is considered an employer business expense. If the employer requires the employee to bear the cost of a uniform, deductions cannot reduce an employee's pay below minimum wage or cut into any any required overtime pay, according to the U.S. Department of Labor.
- Franchises and joint employment: Domino's itself was not a party to this case. Recently, a California court ruled that McDonald's was not a joint employer, even though there was some evidence it knew the franchise owner was violating state wage and hour laws, because McDonald's lacked sufficient control over the plaintiffs' employment.
To avoid wage and hour lawsuits, employers are well-advised to stay up-to-date on applicable state, federal and local laws and to train managers on compliant timekeeping practices.