Domino’s Pizza is in the middle of a lawsuit regarding the FLSA kickback rule. FLSA is the Federal Labor Standards Act, which governs Federal wage and hour law and the kickback rule could affect anyone who has employees using their own vehicle when travel is involved.
Domino’s required employees to use their own car for deliveries and paid a flat $1 for each delivery. When employees looked at the actual distance they drove and calculated the mileage using the IRS rate, they were coming up an average of $1.30 short per delivery.
Why is this important? Because if the employee must put some of their money toward a business expense that isn’t reimbursed, the amount of that expense is basically “kicked back” to the company. So if your employee’s cost for running that errand was $2 and you only pay $1, the employee has kicked back $1 to you.
The FLSA’s concern is with that kickback rule, which can be triggered:
- Through deductions from the employee’s wages to pay for an expense that was for the benefit of the employer; or
- By failing to reimburse an employee for those expenses.
This FLSA kickback rule comes up frequently in situations where there are delivery drivers who use their own vehicles, a technician who drives their own truck, a maintenance worker who purchases his own tools, or a production worker who purchases uniforms, for example.
If you are forcing employees to pay for anything (and not fully reimbursing them), remember this kickback rule and do your math!
About Your Columnist
CJ Westrick is a featured columnist for Women Taking Charge, the official blog of Connected Women of Influence, where she covers all things human resources and managing people in the workplace. CJ Westrick, SPHR, has been in human resources (HR) management for over 20 years and has maintained her SPHR (Senior Professional in Human Resources) national certification since 2002. She started HR Jungle, a human resources consulting firm, in 2006 to provide senior-level HR expertise to businesses without internal HR.