Inaccurate mileage reimbursements can cost employers hundreds of dollars per employee each month, adding up to thousands of dollars over the course of a year. These costs are significant but pale in comparison to settlements paid for reimbursement-related class-action lawsuits. The Fair Labor Standards Act (FLSA) requires employers to pay their employees minimum wage, and many states have additional employee-protection laws that require employers to provide reimbursement for all business-related expenses. Falling short of these standards can lead to class-action lawsuits, stretching the costs of inaccurate mileage reimbursements into the millions.
The following lawsuits are publicly available and showcase the importance of accurate mileage reimbursements.
Corporate Headquarters: Fort Worth, Texas
RadioShack paid $4.5 million to settle a lawsuit related to California Labor Code section 2802. An employee in Northern California claimed the company did not reimburse employees for the expenses they incurred when using their personal vehicles for inter-company store transfers. As part of the lawsuit, RadioShack contended that they were only required to reimburse employees for work-related expenses if proper requests were made, but the Court disagreed.
Corporate Headquarters: Plano, TX
A court approved $5.1 million for current and former Pizza Hut, Inc. drivers as part of a class-action settlement. The plaintiffs argued they were not reimbursed for job-related costs incurred while using their personal vehicles. These costs included, without limitation, making Pizza Hut deliveries.
Corporate Headquarters: San Antonio, TX
Harte-Hanks Shoppers, Inc. paid $7 million to settle a class-action lawsuit related to CA Labor Code section 2802. Shoppers reimbursed their sales representatives for using their personal vehicles by providing a higher base compensation, rather than providing customized expense payments. The courts ruled that adding a lump sum to compensation could satisfy an employer’s requirement to reimburse employees, but there must be a method to “apportion” the increased compensation to identify what amount represents reimbursement.
Corporate Headquarters: Seattle, WA
Starbucks settled a mileage reimbursement-related class-action lawsuit of $3 million with about 30,000 employees. The plaintiff alleged that Starbucks did not reimburse workers for mileage expenses incurred when using their personal vehicles on the job “as a matter of company policy.”
Corporate Headquarters: Deerfield, IL
Of the $23 million Walgreen Co. paid as part of nine consolidated wage and hour class-action lawsuits, $1.5 million was allotted for claims under California Labor Code section 2802. In this case, Walgreens allegedly failed to reimburse employees for business-related expenses.
Corporate Headquarters: Plano, TX
Crossmark, Inc. reached a $1 million settlement for nearly 6,000 employees who were allegedly under-reimbursed for travel and business-related expenses. The company faced allegations that it did not properly reimburse employees for their business mileage and their time spent driving.
Toys “R” Us
Corporate Headquarters: Wayne, NJ
Toys “R” Us is involved in a lawsuit for allegedly not reimbursing employees for necessary travel expenses. The lead plaintiff, who was required to attend offsite meetings, transport materials between stores, and drive to the bank to deposit or withdraw money during work hours, claims Toys “R” Us made it difficult for her to receive reimbursements. The suit is filed on behalf of current and former managers and assistant managers in California who incurred similar travel expenses without full reimbursement.
Corporate Headquarters: Ann Arbor Charter Township, Michigan
Domino’s franchisees faced not one, but two class-action lawsuits alleging their drivers were paid less than minimum wage. Domino’s franchisees paid a flat rate reimbursement of $1 per delivery. When compared to the IRS rate at the time of 57.5 cents per mile, the drivers claim they were shorted by about $1.30 per delivery. This alleged shortfall would take employees’ payments below the minimum wage, which would result in a violation of the Fair Labor Standards Act.
Corporate Headquarters: Champaign, IL
300 delivery drivers brought a case against Jimmy John’s Gourmet Sandwich for allegedly violating both the Fair Labor Standards Act and the Kansas Wage Payment Act. The drivers claimed they were made to pay their own vehicle insurance, maintenance, and work-related phone use. The drivers relied on their cell phone’s GPS systems, for which they were not reimbursed. They alleged that these costs effectively brought their pay below minimum wage.
Is your organization at risk of a lawsuit? Contact us today to review how you can eliminate risk within your vehicle program.