Court revives Papa John’s mileage reimbursement case
A federal appeals court has revived a delivery driver’s wage and hour lawsuit against a Papa John’s franchise operator, according to HRMorning. The Tenth Circuit ruled that the driver’s complaint sufficiently alleged that a 35-cent-per-mile reimbursement rate pushed his pay below the federal minimum wage and reduced his overtime pay.
The case involves Steve Mighell, who worked for a Papa John’s franchise in Colorado. In 2023, he filed a class action lawsuit claiming the flat mileage rate did not cover the actual cost of using his personal vehicle for deliveries. The district court had dismissed the case, but the appeals court reversed that decision, allowing the claims to proceed.
Appeals court finds injury sufficiently alleged
The district court dismissed Mighell’s complaint after concluding he had not shown an injury. It relied on pay stubs provided by Papa John’s showing that his wages and tips remained above minimum wage, even after estimated vehicle expenses. However, the Tenth Circuit said the lower court “erroneously put the cart before the horse,” according to HRMorning. The appeals court explained that Mighell’s allegation that unreimbursed delivery costs pushed his pay below minimum wage was enough to establish an injury at the early pleading stage.
Whether Papa John’s pay-stub calculations correctly showed that Mighell’s pay remained above minimum wage after accounting for delivery expenses will be decided as the case proceeds. The ruling does not resolve the merits but allows the lawsuit to move forward.
Mileage reimbursements and minimum wage compliance
The case highlights the wage and hour risks employers face when employees use personal vehicles for work. Under the Fair Labor Standards Act, employers must ensure that unreimbursed business expenses do not effectively reduce an employee’s pay below the minimum wage or cut into overtime compensation. A flat mileage rate may simplify administration, but it does not by itself establish compliance.
HRMorning noted that the IRS standard mileage rate is a benchmark, not an FLSA requirement. Employers should review whether their reimbursement rate reflects what employees actually spend to operate their vehicles for work. After vehicle expenses, if any employee’s pay falls below the applicable minimum wage for the workweek, the employer may be liable.
Practical steps for HR and payroll teams
HR and payroll professionals can take several steps to identify minimum wage risks related to vehicle reimbursements. HRMorning suggested starting with a review of which employees use their own vehicles for work and what minimum wage applies where they work. It is also important to consider how tips and unreimbursed work-related expenses affect an employer’s ability to claim a tip credit.
Employers should regularly review their mileage rate as fuel, insurance, maintenance, and other costs change. Payroll should have the mileage, reimbursement, time, and pay data needed to run calculations and quickly fix any shortfalls. Rules vary by jurisdiction, so employers should consult legal counsel for specific compliance guidance.
Case background and next steps
The case is Mighell v. HPG Pizza I, LLC, filed in federal court in Colorado. The Tenth Circuit’s decision sends the case back to the district court for further proceedings. The plaintiff seeks to represent a class of similarly situated drivers.
The ruling serves as a reminder that wage and hour claims can arise from reimbursement practices, not just direct pay. Employers with delivery drivers or other employees who use personal vehicles for work should review their policies and recordkeeping to mitigate risk.
Sources: HRMorning
