Employers are responsible for any and all business expenses. In the event a worker has to cover expenses for the employer, the employer is required to properly reimburse the worker in a timely manner. But problems can arise in situations where it’s difficult to determine the exact amount of the expense incurred by the employee.
For example, drivers who use their own vehicles when performing deliveries for their employer incur expenses for gas, insurance, and maintenance for wear and tear on their vehicle, but it’s not always easy or possible to determine the exact amount of expenses incurred for each trip.
Hishmeh Enterprises Inc., a franchise owner of 70 different Domino’s locations in California, allegedly failed to properly compensate its delivery drivers by reimbursing them only $1 per delivery. If a delivery was between 15 and 20 miles away, the drivers were reimbursed $2.
Derek G., who filed the lawsuit, alleges the average distance for a delivery is four miles, which means the average compensation the drivers received was $0.25 per mile. This allegedly is less than half the IRS policy of compensating $0.575 per mile. By these calculations, Derek alleges he, and other Domino’s drivers, should be paid at least $2.30 for the average delivery trip.
Derek claims he averaged 2.5 deliveries per hour, so he was reimbursed $2.5 per hour for expenses for his vehicle. But if the drivers were being compensated the IRS rate, they allegdly would receive $5.75 for each trip.
Derek alleges this was a systematic failure on the part of Hishmeh Enterprises to abide by both federal and state employment laws. Due to the unfairly low reimbursement rate, Derek alleges the expenses he and other drivers incurred in the course of performing deliveries resulted in a total monetary gain that was less than the legally mandated minimum wage.
The lawsuit also claims the franchise unfairly benefited from “ill-gained profits at the expense of its employees”, which constitutes an unfair business advantage. By allegedly failing to properly reimburse its drivers for all business expenses incurred, Hishmeh Enterprises allegedly enjoys higher profits than competitors who reimburse their employees at a proper rate, closer to that of the IRS.
Hishmeh Enterprises denies all of the claims and takes the position that it did not violate any laws.
The federal Fair Labor Standards Act (FLSA) and California labor law do require employers to reimburse driving employees for vehicle expenses, although they do not require them to be paid at the IRS rate. However, the state does encourage employers to match the IRS rate as closely as possible.
Like many large corporations, Domino’s and its franchisees have had to deal with wage and hour allegations before this. Just last year, a similar wage and hour class action lawsuit that was filed in Georgia.
Derek is seeking certification of a lawsuit that would represent all delivery drivers who worked for Hishmeh in California in the past four years. It is estimated this would include several hundred current and former delivery drivers. If he is successful, Hishmeh Enterprises could end up paying millions to reimburse its delivery drivers.
Our Alsip and Wheeling wage and hour attorneys and unpaid overtime lawyers and attorneys are intimately familiar with the issues that arise during wage claim litigation, and we know the laws that govern overtime cases well. Many employers misclassify employees as being exempt from overtime laws and pay workers salaries instead of hourly wages in order to avoid paying them overtime. Some employers mistakenly classify employees as exempt and others intentionally do so in order to circumvent the law. In either case, workers do not receive the wages they should, and a lawsuit may be the only way to recover their earned wages.
Nationwide Consumer Rights is based in Chicago and Oakbrook Terrace. We represent clients throughout the country who have not been paid for the overtime hours that they worked. If you believe that you are owed overtime wages, contact one of our Chicago class action attorneys by phone at 630-333-0333 or through our online form.