On November 5, 2019, the Southern District of Ohio held that Papa John's violated the Fair Labor Standards Act's ("FLSA"), Anti-Kickback regulation when it failed to pay pizza delivery drivers either the actual costs of using their personal vehicles to deliver pizzas or reimbursing them at the IRS standard business mileage rate as prescribed in the Department of Labor Field Operations Handbook.

In Hatmaker v. PJ Ohio, LLC, 2019 U.S. Dist. LEXIS 191790 (S.D. Ohio Nov. 5, 2019), the Court held that pizza delivery drivers' personal vehicles are tools of the trade and that Papa John's received an unlawful "kick-back" by shifting part of its costs of doing business to the drivers by failing to pay them for the expenses of operating their personal vehicles to deliver pizzas. The Court explained that such a practice caused the drivers' wages to fall below the federal minimum wage standard.

KEY TAKEAWAY: The Hatmaker decision gives employers of delivery drivers two choices:

(1) keep records of the actual expenses drivers incur by using their personal vehicles to make deliveries and reimburse them; or

(2) reimburse drivers at the IRS standard business mileage rate.