Tag Archives: Wage and Hour Laws

D.Colo.: Pizza Hut Delivery Drivers’ Minimum Wage Claims, Premised on Claim That Defendants Failed to Reasonably Estimate Vehicle-Related Expenses for Reimbursement Can Proceed; Defendants’ Motion to Dismiss Denied

Darrow v. WKRP Management, LLC

This matter was before the Court on the defendants’ motion to dismiss plaintiff’s second amended complaint.  Plaintiff, a Pizza Hut delivery driver, alleged that defendants, Pizza Hut franchisees, violated the Fair Labor Standards Act (“FLSA”) and the Colorado Minimum Wage of Workers Act (“CMWWA”) by failing to reasonably approximate his automotive expenses for reimbursement purposes, and thereby, failing to pay him minimum wage.

Significantly, defendants paid plaintiff and opt-in plaintiffs at or near the Colorado minimum wage from 2007 to 2009.  According to the court, on average, the plaintiff and opt-in plaintiffs delivered two to three orders per hour and drove five miles per delivery.  Plaintiff alleged that defendants required their delivery drivers to ‘maintain and pay for safe, legally-operable, and insured automobiles when delivering WKRP’s pizza and other food items.’  Defendants reimbursed Plaintiff between $0.75 and $1.00 per delivery for the vehicle expenses incurred by plaintiff to make deliveries. Plaintiff alleged that it was defendants’ policy and practice to unreasonably estimate employees’ automotive expenses for reimbursement purposes, which caused Plaintiff and other similarly situated individuals to be paid less than the federal minimum wage and the Colorado minimum wage from 2007 to 2009 in violation of the FLSA and the CMWWA.

Rejecting defendants’ argument that plaintiff failed to state a claim for unpaid minimum wages under these facts, the court looked to the section 7(e)(2), which states that an employee’s regular rate does not include travel or other expenses incurred in furtherance of the employer’s interest:

“The FLSA provides a definition for “wages,” but does not address an employer’s reimbursement of expenses. However, “[Department of Labor] regulations are entitled to judicial deference, and are the primary source of guidance for determining the scope and extent of exemptions to the FLSA,” including expense reimbursement. Spadling v. City of Tulsa, 95 F.3d 1492, 1495 (10th Cir.1996). Therefore, the Court will look to the Department of Labor regulations to determine whether, under the FLSA, an employee may claim that his wages are reduced below the minimum wage when he is under-reimbursed for vehicle-related expenses. Under 29 C.F.R. § 531.35, “the wage requirements of the [FLSA] will not be met where the employee ‘kicks-back’ directly or indirectly to the employer or to another person for the employer’s benefit the whole or part of the wage delivered to the employee.” A kickback occurs when the cost of tools that are specifically required for the performance of the employee’s particular work “cuts into the minimum or overtime wages required to be paid him under the Act.” Id. Section 531.35 specifically incorporates § 531.32(c), which in turn incorporates § 778.217, which states:

Where an employee incurs expenses on his employer’s behalf or where he is required to expend sums solely by reason of action taken for the convenience of his employer, section 7(e)(2) [which provides that employee's regular rate does not include travel or other expenses incurred in furtherance of the employer's interest] is applicable to reimbursement for such expenses. Payments made by the employer to cover such expenses are not included in the employee’s regular rate (if the amount of the reimbursement reasonably approximates the expenses incurred). Such payment is not compensation for services rendered by the employees during any hours worked in the workweek.  29 C.F.R. § 778.217(a). In Wass v. NPC International, Inc. (Wass I), 688 F.Supp.2d 1282, 1285–86 (D.Kan.2010), the court concluded that these regulations “permit an employer to approximate reasonably the amount of an employee’s vehicle expenses without affecting the amount of the employee’s wages for purposes of the federal minimum wage law.” However, if the employer makes an unreasonable approximation, the employee can claim that his wage rate was reduced because of expenses that were not sufficiently reimbursed. Id. at 1287.

Plaintiff alleges that his under-reimbursed vehicle expenses constituted a kickback to Defendants because Defendants failed to reasonably approximate Plaintiff’s vehicle-related expenses and Plaintiff was specifically required to use and maintain a vehicle to benefit Defendants’ business. Plaintiff further alleges that Defendants’ unreasonable approximation of Plaintiff’s vehicle-related expenses led to Plaintiff’s wage being reduced below the minimum wage.

Defendants argue that Plaintiff cannot use an estimated mileage rate as a substitute for actual vehicle-related expenses. Without pleading his actual expenses, Defendants contend that Plaintiff is unable to prove (1) that Defendants’ reimbursement rate was an unreasonable approximation, and (2) that Defendants paid him below the minimum wage as a result of the under-reimbursement. Plaintiff responds that he does not have to produce his actual automotive expenses in order to state a claim under the Iqbal and Twombly standard because he can raise the plausible inference that Defendants’ approximation of his vehicle-related expenses was unreasonable without knowing his actual expenses. For the following reasons, the Court finds that Plaintiff’s Amended Complaint meets the pleading standard under Iqbal and Twombly.”

After a recitation of the applicable law, the court held that plaintiff had sufficiently pled his estimated costs of running his vehicle, using a variety of facts, including the reimbursement rate paid by defendants versus the IRS’ mileage reimbursement rate.  Further, when taken together with plaintiff’s hourly wages, he had sufficiently pled that defendants failed to pay him at least the federal and/or Colorado minimum wage(s).  Therefore, the court denied defendants’ motion in its entirety.

Click Darrow v. WKRP Management, LLC to read the entire Order.

1 Comment

Filed under Minimum Wage, Regular Rate, Tips

W.D.Ark.: FLSA Does Not Preempt State Common Law Claims; Claims Dismissed On Other Grounds

Montize v. Pittman Properties Ltd. Partnership No.1

This case was before the Court on one of the Defendant’s  Motion for Partial Judgment on the Pleadings filed.  The Plaintiffs did not file any response to the Motion.  Of interest, the Court held that certain non-FLSA state law claims were not preempted by the FLSA.  In so holding, the Court noted its agreement with the Ninth Circuit and disagreement with the Fourth Circuit on this issue.  Nonetheless the claims at issue were dismissed for failure to state a claim, because they failed to allege, with specicificity, the facts on which such claims could rest.

The Court dicussed the following facts (as pled) as relevant to its inquiry:

“In this action, Plaintiffs were migrant agricultural workers employed by Pittman Nursery Corporation for seasonal work. They allege that a former Pittman Nursery employee, Dawood Aydani, extorted money from them over the course of several years, in the form of kickbacks, and that such extortion effectively reduced Plaintiffs’ net compensation below the federal and state minimum wage. Specifically, Plaintiffs allege that Mr. Aydani required Plaintiffs to pay him $1,000 cash to secure and keep their employment. They further allege that these funds were then shared with some of the other Defendants in this action.

Plaintiffs assert causes of action under the Fair Labor Standards Act (“FLSA”), under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), and for negligent supervision. Pittman Nursery asks the Court to dismiss the non-FLSA claims and argues that these claims are preempted by the FLSA.”

Discussing the issue of preemption, the Court held: 

“The FLSA authorizes workers to file private actions to recover unpaid wages, damages, costs, and attorneys’ fees. 29 U.S.C. § 216(b). Pittman Nursery argues that, because Congress intended that these remedies be exclusive, duplicative claims seeking damages beyond those established under the FLSA are preempted by federal law. In the present case, Pittman Nursery asserts that the FLSA preempts Plaintiffs’ state law and RICO claims because these claims are duplicative. The Court does not agree.

The Eighth Circuit has not addressed the issue of whether the remedies under the FLSA are exclusive. The Court is aware that the Fourth Circuit has held that the FLSA preempts claims that “depend on establishing that [the employer] violated the FLSA.” Anderson v. Sara Lee Corp., 508 F.3d 181, 193 (4th Cir.2007). Several other district courts outside of the Eighth Circuit have ruled that state claims are preempted by the FLSA where those claims merely duplicate the FLSA claims. Id. at 194. On the other hand, the Ninth Circuit has held that the FLSA does not preempt common law fraud claims and that the FLSA does not provide exclusive remedies for violating its provisions. Williamson v. Gen. Dynamics Corp., 208 F.3d 1144, 1151-53 (9th Cir.2000). Also, several district court cases within the Eighth Circuit have held that the FLSA does not provide the exclusive remedy for its violations and does not preempt state law claims even when there is a common core of operative facts. See Cortez v. Neb. Beef, Inc., Nos. 8:08CV90, 8:08CV99, 2010 WL 604629 (D.Neb. Feb.16, 2010); Bouaphakeo v. Tyson Foods, Inc., 564 F.Supp.2d 870, 886 (N.D.Iowa 2008); Robertson v. LTS Management Services, LLC, 642 F.Supp.2d 922, 928 (W.D.Mo.2008); Osby v. Citigroup, Inc., No. 07-CV-06085-NKL, 2008 WL 2074102 (W.D.Mo. May 14, 2008). Most district courts in the Eighth Circuit agree that the FLSA’s savings clause, which allows states to enact stricter wage, hour, and child labor provisions, indicates that the FLSA does not provide an exclusive remedy for its violations. Bouaphakeo, 564 F.Supp.2d at 882. In fact, “it would seem that state law may offer an alternative legal basis for equal or more generous relief for the same alleged wrongs.” Cortez, 2010 WL 604629, at *6.

Here, the Court is more persuaded by the opinions of district courts within the Eighth Circuit and adopts the view that the FLSA does not provide an exclusive remedy for violations of its provisions. Accordingly, the Court does not agree with Pittman Nursery that Plaintiffs’ non-FLSA claims are preempted by the FLSA.”

Leave a comment

Filed under Preemption, State Law Claims

Health Care Reform Law Amends FLSA to Require Breastfeeding Breaks, Thompson Reports

Under the new Health Care Reform Law, the FLSA has been amended in several important respects.  In addition to the highly publicized provision of healthcare for previously uninsured people, Thompson reports that employers must now provide breaks for women who are breastfeeding:

“Employers must now provide “reasonable” unpaid breaks to nursing mothers to express milk for their infants under an amendment to the Fair Labor Standards Act included in the landmark health care law signed by President Obama on March 23.

The health care law adds a new provision to the FLSA, 29 U.S.C. §207(r)(1), which allows nursing mothers to take a break every time they need to express breast milk and requires employers to provide a private location, other than a bathroom, where such employees may express milk. Employees must be allowed such breaks for up to one year after their child’s birth.

Employers of fewer than 50 employees are exempt if the breastfeeding requirements would “impose an undue hardship by causing the employer significant difficulty or expense.”

A number of states already mandate breastfeeding breaks, and under the FLSA, employers must comply with the standard that is more favorable to the employee (29 U.S.C. §218).

The health care law also amends the FLSA to require employers of more than 200 employees to automatically enroll new employees in existing employer-offered health plans.”

To read the entire article click here.

Leave a comment

Filed under Coverage, Wage and Hour News

Miami-Dade County Passes New Wage Theft Ordinance, Miami Herald Reports

The Miami Herald reports that Miami-Dade “[c]ounty overwhelmingly passed a new ordinance to combat wage theft, making it easier for workers to bring legal action against employers who fail to pay them.

Thursday’s vote comes after more than a year of work by a non-governmental task force of labor and immigrant advocates in Miami. San Francisco has a similar ordinance. Los Angeles and New Orleans are considering them.”

In addition to recovering the unpaid wages that have been wrongly denied them, workers can recover 2 times that amount in additional damages.  The ordinance will result in a a low-cost administrative process that seeks to speed along claims for workers who have not been properly paid their wages.

Leave a comment

Filed under Wage and Hour News, Wage Theft