DOL Opinion FLSA2020-12 Clarifies Reimbursement Rules for Pizza Hut Delivery Drivers

The U.S. Department of Labor’s Wage and Hour Division told employers they may reimburse delivery drivers who use personal vehicles with a reasonable approximation of actual expenses rather than being bound to the IRS standard mileage rate. In Opinion Letter FLSA2020-12 dated August 31, 2020, the WHD framed its response around minimum-wage compliance for hourly, nonexempt drivers who deliver pizza and other foods.

The opinion was issued in response to a requester’s letter and, the WHD emphasized, “is based exclusively on the facts you have presented.” The department also noted the requester “represent[s] that you do not seek this opinion for any party that the Wage and Hour Division (WHD) is currently investigating or for use in any litigation that commenced prior to your request.” The letter described the core question as how employers can reimburse vehicle expenses without driving employee pay below the federal minimum wage.

WHD’s central formulation is explicit: “WHD does not endorse particular methods of approximating employees’ expenses for reimbursement. The FLSA’s implementing regulations are flexible on this issue, requiring only that a method reasonably approximate employees’ actual expenses. Whether a particular method does so will depend on the circumstances in each case.” The opinion also acknowledged practical limits on precision, quoting that “precise calculations may not be practical, or even possible, depending on the nature of the expense. For example, it may not be possible to calculate exact depreciation, fuel usage, etc., with precision - at least not without extraordinary effort - particularly with mixed [business and personal] usage.”

The WHD pointed to the Field Operations Handbook but stressed the FOH’s two calculation methods do not foreclose other approaches. The requester’s letter listed suggested approximations, including “• A flat rate per delivery [...]” among other truncated proposals cited in the opinion excerpt.

Legal observers have noted the administrative guidance sits against a split federal court landscape. Most courts have allowed reasonable approximations, while a couple of courts have required either reimbursement of actual total costs or payment at the IRS rate, with those decisions relying on the FOH. Law firm commentary described the pre-opinion litigation climate as one where “employers across the country, including franchisors (and their franchisees), have been besieged with myriad collective wage-and-hour actions claiming their delivery driver reimbursement policies violate the Fair Labor Standards Act (FLSA).” Firms also interpreted the opinion as giving employers “substantial latitude” and as potential ammunition in defending pending claims.

For Pizza Hut drivers and other restaurant delivery workers, the decision means employers may adopt varied reimbursement schemes - flat fees per run, per-shift stipends, or calculated per-mile rates that fall below the IRS figure so long as they reasonably approximate actual costs and do not reduce pay below minimum wage. Vorys noted the Opinion Letter “is an official interpretation of the governing statutes and regulations by the Administrator of the WHD for purposes of the Portal-to-Portal Act,” and said employers may rely on it as a defense, though courts will ultimately decide disputes.

What comes next is likely litigation and policy adjustments. Franchisors, franchisees, and corporate managers should document the methodology they use and track driver expenses. Drivers should keep records of fuel and vehicle costs if they expect reimbursement disputes. Courts may continue to define boundaries, so both employers and workers should monitor legal developments and update reimbursement practices accordingly.