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Tread carefully when factoring employee travel expenses into pay calculations

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in Compensation and Benefits,Human Resources

Here’s a wage-and-hour problem that may trip up Minnesota employers: Employees who have to pay their own travel expenses may end up making less than minimum wage. Allowing this to happen when the expenses exceed $50 may also violate Minnesota’s prohibition on deducting more than that amount for employee expenses.

Recent case: Several delivery drivers sued Domino’s Pizza. They alleged they paid more than $50 per pay period in car expenses to deliver pizza. They said they made less than minimum wage when they subtracted their actual expenses from their pay. In effect, they were arguing that Domino’s was making illegal deductions from their checks, because the amount exceeded $50.

Minnesota law, they said, does not allow higher deductions.

Domino’s argued that the wage deductions law shouldn’t be interpreted to mean that travel expenses paid by the employees were deductions.

The court disagreed, and said such expenses should be treated like uniform and equipment purchases required by employers. It also refused to dismiss the minimum-wage claim. (Luiken, et al., v. Domino’s Pizza, No. 09-516, DC MN, 2009)

Final note: Wage-and-hour law isn’t for the faint of heart. In fact, it is best to get expert guidance whenever any issues arise relating to either federal or state law. On the federal level, the U.S. Department of Labor is stepping up enforcement of the nation’s wage laws, aiming to collect more money owed to employees.

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