Pizza Hut faces $ 150 million class action over alleged misclassification of delivery managers

Pizza Hut, one of the world’s largest pizza chains, is facing a $ 150 million class action lawsuit in Canada for allegedly misclassifying its delivery managers as independent contractors.

The practice has caused thousands of executives at franchise locations across the country to lose basic rights such as minimum wage and overtime pay, all while paying out of pocket for delivery-related expenses, the proposed class action claims.

While the multinational pizza company recognized managers “in the United States and other jurisdictions” as employees, it became involved in “systemic” misclassification by failing to do so in Canada – which violated service laws in several provinces, the statement said. of claims.

In a statement, a Pizza Hut Canada spokesman said its “restaurants are independently owned and operated by franchisees who engage delivery managers in accordance with all applicable laws and regulations.”

“We are unable to comment further on pending litigation at this time,” the statement said.

The allegations contained in the lawsuit have not yet been tested in court, where the class action must now be certified to proceed.

The chief prosecutor, Liubomir Marinov, started working at a Toronto area Pizza Hut in 2005 and is classified as an independent contractor, a category of workers who have no protection under provincial employment laws. Since then, he has “experienced the challenges of misclassification and sub-minimum wage labor first hand,” he said.

“I bring this proposed class action not only to stand up for myself, but for delivery managers across Canada to improve the lives of these workers.”

Marinov was paid $ 4.50 per delivery plus tips for a period, according to the statement of claim. In the spring of 2020, he started making an hourly rate of $ 8, which recently rose to $ 10.

In addition to being denied Ontario’s minimum wage, now $ 15 an hour, Marinov had to cover all the expenses to do his job himself, according to the lawsuit. This included gas and car costs, as well as a data plan to use Pizza Hut’s in-house delivery program called Dragon Drive.

“He was not reimbursed for any of these expenses,” the lawsuit reads.

The proposed class action dates back to 2019, when the Dragon Drive application was fully implemented in the company. Pizza Hut has about 18,000 restaurants in 100 countries, according to the statement of claim, and is the second largest chain in Canada.

The lawsuit alleges that franchisee Pizza Hut is effectively a single employer that sets overarching practices and standards on all of its store fronts – including the contractor designation for managers. In addition to the exclusion of managers from provincial employment laws, the classification also means that companies do not have to make service insurance or pension contributions.

Yet delivery drivers in the United States are classified as employees, court records show, although Pizza Hut and its franchisees have been subject to legal action alleging that drivers are illegally required to pay their own vehicle expenses.

“Food delivery is difficult work for low pay. Managers like mr. Marinov was on the front lines of the COVID-19 pandemic, delivering Canadian food and making it possible for many of us to stay home safely, ”said Josh Mandryk at Goldblatt Partners, one of the Toronto-based labor law firms that litigation.

To comply with the legal definition of an independent contractor, workers must exercise considerable control over their own working conditions. For labor advocates – and recent legal decisions – the designation does not accurately capture the realities of actions, which critics say are far less flexible than proponents claim.

The proposed group action is part of a growing number of challenges for what critics call misclassification in a number of areas, from food delivery to healthcare to trucks.

“Employees’ misclassification in the pizza delivery industry is pervasive. This class action is about challenging that practice and improving jobs for Pizza Hut delivery managers, ”said Andrew Monkhouse of Monkhouse Law, the firm that jointly represents Marinov.

According to the group action, “all aspects” of Marinov’s work were “determined in detail” by Pizza Hut’s app. Delivery managers cannot choose which orders to fulfill, or reject orders assigned to them; they are also placed on a timer when deliveries are made, according to the lawsuit.

“If a driver does not follow the directions of the application, they risk discipline,” the statement read.

In addition, Marinov’s contract allegedly set out instructions on how to act at work: managers can not ask for tips, must report for their shift at a set time, and are prohibited from working for other companies during those hours. .

These features set Pizza Hut apart from other app-based delivery companies, Monkhouse noted.

“Like other delivery applications, the application commissioned by Pizza Hut provides significant control over when and how the delivery managers perform their work,” he said. “Unlike many of those working on applications in the gig economy, however, Pizza Hut delivery managers are scheduled for shifts, delivering food exclusively to Pizza Hut during their scheduled hours.”

As delivery is “the backbone of the pizza industry”, Pizza Hut’s executives were also “integral” to the company’s core business – another feature of employee status, the class action adds.

“(Marinov) has been working for the defendants for more than a decade,” the lawsuit reads. “(He) was deprived of the benefits and security that minimum service standards would offer him.”