By Rick Hynum
Delivery drivers have been taking major pizza chains to court in recent years, alleging that low mileage reimbursements effectively push their pay below the minimum wage.
The latest revolt, as reported by the Iowa Capital Dispatch, comes in the form of a proposed class-action lawsuit filed last week against PJIOWA of Des Moines, a large Papa Johns franchisee that operates at least 26 restaurants in Iowa, Illinois and South Dakota.
The lawsuit, filed in U.S. District Court for the Southern District of Iowa, alleges PJIOWA undercompensated delivery drivers for making deliveries in their personal vehicles. Taking into account unreimbursed vehicle expenses, the drivers effectively earned less than the federal minimum wage of $7.25 per hour, the complaint claims.
PJIOWA allegedly reimbursed drivers at a rate of 35 cents per mile while paying them $5 per hour, including a tip credit that allowed the company to pay below the federal minimum wage.
The lawsuit contends that the true cost of owning and operating a vehicle ranges from 77 cents to 82 cents per mile. As a result, plaintiff Christina Knox claims to have lost about 42 cents in net wages for every mile she drove. Knox averaged roughly three deliveries and 15 miles of driving per hour, according to the complaint. At that rate, the unreimbursed costs reduced her net wages by about $6.30 per hour, the lawsuit alleges.
The complaint further states that other PJIOWA delivery drivers were subject to the same reimbursement policy.
PJIOWA has not yet responded to the suit, according to the Iowa Capital Dispatch. The company has denied similar allegations in previous wage-and-hour cases.
This is actually the third lawsuit centered on driver pay that PJIOWA has faced in the past 11 years. In 2015, Papa Johns driver Brandon Tegtmeier filed a class-action lawsuit alleging PJIOWA paid drivers $5.50 per hour while providing inadequate reimbursement for vehicle expenses and requiring workers to pay for uniforms. The workers also alleged they were assigned non-tipped duties—including cleaning, answering phones and preparing pizzas—despite being paid as tipped employees. That case was settled after two years of litigation, and the terms were kept confidential at the request of both sides.
PJIOWA faced another class-action case in 2017. Billy D. Frazier of Cedar Rapids and 229 other workers alleged they spent more than 20% of their time performing non-tipped duties—such as folding boxes, washing dishes, sweeping and mopping—while being paid as tipped employees. The case was settled confidentially in 2020.
Domino’s faced a similar lawsuit in 2021 when driver Alexia Stevens and others claimed that the pizza giant’s low mileage reimbursement rate meant drivers were effectively being paid just pennies an hour. That suit was dismissed in 2022, with no public record of a settlement, according to the Iowa Capital Dispatch.
In 2024 Seattle-based Pagliacci Pizza settled a class-action lawsuit with delivery drivers for $830,000. Drivers alleged that Pagliacci Pizza paid them a flat rate per delivery rather than by the mile. The disparity, the suit alleged, meant that some delivery drivers were working for less than the legal minimum wage.
At that time, Pagliacci co-owner Matt Galvin said the lawsuit had been filed shortly after the brand had brought its delivery payments into accordance with IRS guidelines. “Eligible current and former drivers will receive reimbursement reflecting the difference between Pagliacci’s previous rates and the IRS mileage guidelines at the time of each delivery,” Galvin said in a statement after that case had been settled.
In 2021, Pagliacci settled a similar suit for $3.75 million that revolved around allegations of improperly managed mileage reimbursement, wages, tips and shift breaks. Pagliacci co-owner Matt Galvin said in a statement that the 26-location chain has always strived to fairly compensate drivers.
For independent pizzeria operators, there’s a lesson to be learned here: Don’t treat driver reimbursement as an afterthought. If your employees use their personal vehicles to deliver your food, make sure you’ve got a clearly documented policy for calculating reimbursement and tracking delivery mileage, then review the rates regularly as the costs of fuel, insurance, maintenance and vehicle ownership change.
That doesn’t necessarily mean matching the IRS mileage rate. But a flat rate chosen years ago—or simply copied from another operator—might no longer cover what drivers are actually spending, especially with today’s high costs at the gas pump.
Operators should also examine how tip credits are applied and how much time drivers spend performing work that does not generate tips.
Consider consulting a payroll professional or employment attorney to identify problems before they become lawsuits. Just as importantly, a fair and transparent reimbursement policy recognizes that delivery drivers are furnishing an expensive piece of equipment—their own cars—to help the restaurant serve its customers.
Rick Hynum is PMQ’s editor in chief.
