Charges and Tips for Pizza Delivery Drivers

The Eighth Circuit recently removed certification of a class of 1,600 Minnesota delivery drivers in Luiken v Domino's Pizza.  The drivers allege that under Minnesota law a fixed delivery charge that customers paid Dominos was a gratuity wrongfully withheld from them.  The Eighth Circuit reversed class certification.

Domino's implemented a delivery charge which the drivers received no portion of.  Disclosure of this varied by order.  Online purchasers were told  “Delivery charge will apply,” and employees taking orders were

supposed to say the same.  Delivered boxes included a statement of charges listing the  delivery charge  as “Del  Charge.”  Credit card receipts requiring  signatures included a  blank  line for  tips; the delivery  charge  was included in the  pre-tip “Amount” line.  The delivery charge was sometimes disproportionate for a tip (as it was not a percentage-based gratuity).  At the end of 2009, Domino’s began printing on some boxes, “Any Delivery Charge is not a tip paid to your driver.  Please reward your driver for awesomeness.”

Rule 23 authorizes classes that meet requirements of numerosity, commonality, typicality, and fair and adequate representation.  Fed. R. Civ. P. 23.  “The district court is accorded broad discretion to decide whether certification is appropriate, and we will reverse only for  abuse of that discretion.” Prof’l Firefighters Ass’n of Omaha, Local 385 v. Zalewski, 678 F.3d 640, 645 (8th Cir. 2012).

Under Minnesota law, “any gratuity received by an employee or deposited in or about a place of business for personal services rendered by an employee is the sole property of the employee.”  Minn. Stat. § 177.24 Subdiv. 3.

In Nebraska gratuities are included in the minimum wage calculation as set out in Nebraska Statute 48-1203(2). The statute indicates that for persons compensated by way of gratuities...the employer shall pay wages at the minimum rate of two dollars and thirteen cents per hour, plus all gratuities given to them for services rendered. The sum of wages and gratuities received by each person compensated by way of gratuities shall equal or exceed the minimum wage rate provided in subsection (1) of this section. In determining whether or not the individual is compensated by way of gratuities, the burden of proof shall be upon the employer.

Luiken, the class representative, argued that the delivery charge was a gratuity under Minnesota law, and thus his sole property. The Eighth Circuit noted that Luiken mistakenly concluded that because Domino’s “admits that Minn. Stat. § 177.23 does not require Plaintiffs to show evidence of customers’ actual, subjective beliefs, Avritt is inapposite.” The district court noted, was not tasked with deciding “whether the fact specific circumstances articulated by Domino’s resulted in a customer’s actual belief that the delivery charge was not a tip for the delivery driver,” but the court was required to apply the reasonable customer standard in context.

Under the Minnesota statute and rule, context was important in determining whether customers might reasonably construe an obligatory charge as a payment to employees for personal services rendered. It was problematic for Luiken that some drivers explicitly told customers that the charge went to Domino’s or that it was not a gratuity. Luiken himself told some customers, “There’s this delivery charge, but it’s not – that’s not actually a gratuity.” Those customers could not then reasonably believe it was going to the employees, thus there was not enough of a factual consistency among the class members to justify certification according to the Eighth Circuit. 

If you have questions about how tips or mandatory charges should be treated based on Nebraska employment law, contact Madathil Law Office for a free consultation.

Madathil Law Office, LLC
Employment and Business Law

1625 Farnam Street #830

Omaha, NE 68102

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