Papa John’s Franchisee’s Uses ‘Flawed Method’ to Reimburse Delivery Drivers for Business Expenses, Case Claims

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A proposed collective action claims Papa John’s delivery drivers were not properly reimbursed for business expenses, causing their pay to fall below the federal minimum.

According to the case, defendant North Central Virginia Restaurants, Inc., which operates more than 20 Papa John’s franchise restaurants in Virginia, Maryland and West Virginia, calculates reimbursement rates using a “flawed method” that fails to cover any “reasonable approximation” of drivers’ expenses.

The unreimbursed expenses, which include costs for gas, vehicle parts and maintenance, repair expenses, insurance, and depreciation, have caused the workers’ wages to dip below the minimum rate in some or all workweeks, the suit says.

Per the complaint, Papa John’s requires delivery drivers to maintain and pay for safe, legally operable, insured vehicles for delivering pizza and other items to the restaurants’ customers. The defendant reimburses drivers for expenses on a per-delivery basis, which the case claims has resulted in a per-mile reimbursement rate that falls well below the IRS business mileage rate or “any other reasonable approximation” of the cost to own and operate a vehicle.

Per the suit, the IRS business mileage rate, which represents a reasonable approximation of the average cost of owning and operating a vehicle, ranged between $0.535 to $0.58 per mile during the applicable limitations period. The expenses associated with operating a vehicle for a pizza delivery business are much higher than that of an average driver, the lawsuit argues, noting that the frequent stopping and starting, short routes, and driving under time pressure contribute to lower gas mileage, higher repair and maintenance costs, and more rapid depreciation.

“In sum, Defendant’s reimbursement policy and methodology fail to reflect the realities of Delivery Drivers’ automobile expenses,” the lawsuit reads, alleging drivers receive no reimbursement for “even their ongoing out-of-pocket expenses,” much less the other costs associated with owning and operating their vehicles.

The case argues that Papa John’s “systematic failure” to reimburse automobile expenses constitutes an unlawful “kickback” in that drivers’ hourly wages “are not paid free and clear of all outstanding obligations” to their employer.

The plaintiff, who worked as a delivery driver at the defendant’s Waynesboro and Stanton, Virginia locations, says the reimbursement rate at his store was approximately $1.34 per delivery. With the average delivery distance measuring about six miles, the plaintiff received an average reimbursement rate of $0.22 per mile, well below the IRS’s $0.575 rate, according to the complaint.

Using the difference between the plaintiff’s reimbursement rate and the IRS business mileage rate, the lawsuit estimates that the man earned an hourly wage of approximately $3.46 after his unreimbursed expenses were subtracted.

According to the suit, because Papa John’s delivery drivers earned a gross hourly wage “equal to, or at least very close to,” the federal minimum wage and incurred unreimbursed business expenses, the amount “kicked back” to the defendant was enough to trigger minimum wage violations.

Per the suit, the defendant has applied “the same flawed policy and methodology” with respect to reimbursement rates at all of its Papa John’s stores.

The lawsuit out of Virginia’s Western District Court was filed on the same day as a similar case that challenges the reimbursement policy of a New York Domino’s Pizza franchisee with respect to its pizza delivery drivers.

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