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6th Circuit: Minimum Wage Workers Who Provide Their Tools to Perform Work at The Employers’ Request, Must Be Reimbursed 100%  

15 Apr

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Update Applicable to:Effective date
All employers that have at least 1 worker who uses their vehicle for delivery in Michigan, Ohio, Kentucky, and TennesseeSee details below


What happened?

On March 12, 2024, the U.S. Court of Appeals for the Sixth Circuit vacated two district court decisions (Parker v. Battle Creek Pizza, Inc., No. 22-2119 (Mar. 12, 2024); Bradford v. Team Pizza, Inc., No. 22-3561 (Mar. 12, 2024)) stating that “…If an employer requires a minimum wage employee to provide his own ‘tools’ for work, the employer must reimburse him for 100% of the cost of doing so.


What are the details? 

The case(s)

In two separate cases, Pizza delivery drivers who used their vehicles for work alleged that their employers did not reimburse them sufficiently to cover the costs of their vehicle expenses, resulting in the employees earning less than the minimum wage under FLSA.

The FLSA does not require employers to reimburse employees for vehicle expenses, but, if the cost of using a personal vehicle for work results in the employee’s wages falling below the minimum wage, the failure to reimburse the costs can violate the minimum wage requirement.

In the first case, the court judge in the Western District of Michigan held that drivers should be reimbursed based on the standard IRS mileage rate. 

In the second case, the court in the Southern District of Ohio found that reimbursement of a “reasonable approximation” of the drivers’ costs was sufficient.

Neither method properly reimbursed the individual drivers’ actual costs, the appeals court concluded.

The appeals court did not offer a uniform or controlling formula to calculate vehicle reimbursement costs to follow for determining whether a minimum wage violation occurred.


Conclusion

For employers, there is no legal rule barring them from making pizza delivery drivers provide their vehicles (or workers in general). However, taking this ruling as a guide, if an employer requires a minimum-wage driver to provide their truck for deliveries, under the Fair Labor Standards Act (FLSA), it must reimburse 100% of the cost of doing so to the employee.


Business Considerations 

  • Because this is a court ruling and not a legal statute, employers should seek legal counsel before making any business decisions that are contrary to the court’s stance.
  • The court did not say how employers should calculate these reimbursements, but it warned that underpayment may violate the FLSA.
  • Employers should review and adjust their policies and practices regarding expense reimbursements considering any employees who use their vehicles (or provide the tools) to perform the duties of their position.


Resources


Source References

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