Businesses Have Leeway on Delivery Driver Expenses, DOL Says

Employers of delivery drivers have many options to avoid minimum wage violations while reimbursing the drivers for vehicle expenses, the U.S. Labor Department said in new guidance.

Addressing an issue often at the center of million-dollar lawsuit settlements, the DOL’s Wage and Hour Division said in an opinion letter Monday that companies don’t need to adhere to a particular methodology when determining the total amount they must pay to drivers to cover costs related to their personal vehicle.

As long as the employee is reimbursed at a “reasonable approximation” of actual expenses, and those payments aren’t used to meet the employer’s minimum wage obligation, then the business is in compliance with the Fair Labor Standards Act, the WHD said.

The Division also clarified in its letter to an unnamed food delivery company that it’s only required to reimburse hourly drivers for expenses tied to the worker’s use of that vehicle for the employer, such as gasoline, periodic maintenance, and the depreciated value of the vehicle attributed to employees’ delivery trips.

Costs for driving that are for the employee’s benefit wouldn’t be covered.

Allegations that companies have failed to adequately reimburse drivers are frequently the subject of class and collective actions. A U.S. judge in California on Aug. 6 granted preliminary approval to a $5 million settlement for 950 delivery drivers at Ryder System Inc. and a subsidiary, in part to cover reimbursements for expenses.

A federal judge in June approved a $2.3 million settlement for New York Pizza Hut drivers after they had accused the four franchisees of owing them minimum wages because they didn’t cover their vehicle-related expenses. Allegations that Domino’s delivery drivers weren’t properly reimbursed to cover auto insurance and maintenance led to an $850,000 settlement split among 411 workers in 2018.

Fluctuating Workweek Hours

An opinion letter is a form of interpretive guidance that serves as the government’s way of explaining how federal employment law applies in specific circumstances presented by the person or entity requesting the opinion. The industry covets the letters because they represent the government’s official interpretation of whether a policy is in compliance with federal labor law.

The letters also can be used as a legal defense in some cases, including by individuals and businesses that follow the fact pattern described in a letter.

The delivery driver letter was part of a package of four new letters published Monday that continue the Trump administration’s initiative to use this type of guidance to respond to wage-hour inquiries from outside parties—usually employers and management attorneys.

The agency also weighed in to state that part-time employees who educate executives at other companies likely perform duties that satisfy the FLSA’s learned professional exemption, but don’t meet the salary basis test for that exemption nor do they meet the highly compensated employee test.

Another opinion letter concluded that employers may utilize the fluctuating workweek method to calculate overtime pay for workers whose hours fluctuates from week to week, regardless of whether they go both above and below 40 hours in different time periods.

The WHD also interpreted that truck drivers for an oilfield service company do qualify for the retail or service exemption from overtime, provided that they’re offering waste removal services that aren’t different from what the company furnishes for the general public and that the waste removal industry recognizes these services as retail.