Domino’s Franchisee Drivers Minimum Wage Deal Gets Final Nod

A $995,000 minimum wage deal has received final approval by a federal judge in Georgia.

The action was brought against Domino’s franchisees Cowabunga Inc. and Cowabunga Three LLC, by drivers who alleged the franchisee shorted drivers on vehicle expenses. As a result, the drivers’ rate of pay allegedly dipped below the federal minimum wage in violation of the Fair Labor Standards Act (FLSA).

Plaintiff Chadwick Hines initially brought the collective class action lawsuit against the franchisee for allegedly improperly calculating delivery driver compensation.

According to the lawsuit, the delivery drivers, who use their own vehicles when delivering pizza, claim they were not reasonably reimbursed for the expenses associated with using their vehicles for business.

These expenses include not only mileage, but insurance, maintenance costs, gasoline, and depreciation.

The drivers argue that because they were not properly reimbursed for driving expenses, the costs came out of their wages. And the additional costs coming out of their wages illegally reduced their hourly rate below minimum wage.

Hines, a delivery driver from April 2014 to October 2014, specifically claims he received an hourly wage of $7.25 plus tips. Additionally, Hines received roughly $1 per delivery to cover vehicle expenses.

However, based on Hines’ calculations, the company’s reimbursement rate for each mile driven during deliveries was only about 20 cents.

The IRS established rate for work-related mileage is 56 cents per mile. Even if the $1 per delivery was intended to cover only mileage, the franchisee allegedly underpaid its drivers by at least 36 cents per mile.

If the reimbursement was intended to cover more than just mileage, the franchisee’s wage practices undoubtedly reduced the drivers’ wages below $7.25 per hour, the federal minimum wage.

About the Minimum Wage Deal

Under the terms of the minimum wage deal, Hines will receive a $7,500 service award. The final approval of the settlement ends the employment class action lawsuit filed in 2015 against Cowabunga, one of the largest singly owned Domino’s franchises in the U.S.

“The settlement was the product of arm’s length negotiations by experienced counsel and has the effect of providing substantial relief to all opt-in plaintiffs and eliminating the inherent risks both sides may bear if a complex arbitration continued to a hearing on the merits,” court documents said.

A total of 565 Cowabunga delivery drivers opted into to the minimum wage class action lawsuit. The drivers will receive damages from the $995,000 minimum wage deal in exchange for waiving their wage and hour claims against Cowabunga. The average award per driver is expected to be $1,138.

Cowabunga operates about 100 Domino’s franchise stores in Georgia, Alabama and South Carolina.

Domino’s Faces More Litigation

This is not the first time Domino’s operators have been recently targeted for wage and hour violations.

In May, a pizza deliveryman sued the operators of 26 Domino’s outlets in South Jersey and Pennsylvania, contending the company effectively pays workers less than the minimum wage.

This proposed class action lawsuit contends workers are not reimbursed for the full cost of using personal vehicles to deliver Domino’s products to customers.

Also in May, New York’s Attorney General accused Domino’s of underpaying workers, failing to pay overtime, and not reimbursing delivery drivers for gas.

AG Eric Schneiderman said his office “found rampant wage violations at Domino’s franchise stores. And, as our suit alleges, we’ve discovered that Domino’s headquarters was intensely involved in store operations, and even caused many of these violations.”

The case centers on 10 Domino’s locations owned by three different franchisees but goes after Domino’s LLC, rather than the franchisees.

Schneiderman alleges that Domino’s LLC “micromanaged employee relations at its franchisee stores” and “played a role in the hiring, firing, and discipline of workers,” and is therefore liable for the wage theft violations, as a joint employer of workers. New York State law defines joint employers as those with “control, or authority to control, employees in certain key ways.”

The settled Domino’s Delivery Drivers Minimum Wage Class Action Lawsuit is Hines v. Cowabunga Inc. et al., Case No. 1:15-cv-00828, in the U.S. District Court for the Northern District of Georgia.

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