Pizza Hut faces $150 million class action lawsuit

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

The practice has caused thousands of drivers in franchises across the country to lose basic rights such as minimum wage and overtime pay, while paying out-of-pocket for delivery-related expenses, according to the proposed class action lawsuit. .

Although the multinational pizza company recognized drivers “in the United States and other jurisdictions” as employees, it engaged in a “systemic” misclassification by not doing so in Canada – violating the employment laws in several provinces, the statement said.

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

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

The allegations in the lawsuit have yet to be tested in court, where the class action must now be certified to proceed.

The lead plaintiff, Liubomir Marinov, started working at a Toronto-area Pizza Hut in 2005 and was classified as an independent contractor, a class of worker who enjoys no protections under provincial employment laws . Since then, he has experienced “the challenges of misclassification and working at less than minimum wage,” he said.

“I am filing this proposed class action not only to defend myself, but for delivery drivers across Canada to improve the lives of these workers. »

Marinov was, for a time, paid $4.50 per delivery plus tip, according to the statement. In the spring of 2020, he started earning an hourly rate of $8, which recently dropped to $10.

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

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

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

The lawsuit argues that the Pizza Hut franchisor is effectively a single employer that sets global practices and standards across all of its storefronts, including contractor designation for drivers. In addition to excluding drivers from provincial employment laws, the classification also means that companies do not need to pay employment insurance or pension contributions.

Still, delivery drivers in the United States are classified as employees, according to court records, though Pizza Hut and its franchisees have faced lawsuits alleging drivers are unlawfully required to pay their own vehicle expenses. .

“Food delivery is hard work for low pay. Drivers like Mr. Marinov have been on the front lines of the COVID-19 pandemic, delivering food to Canadians and keeping many of us safe at home,” said Josh Mandryk of Goldblatt Partners, one of the labor law firms behind the lawsuit.

To meet the legal definition of an independent contractor, workers must exercise significant control over their own working conditions. For workers’ rights advocates — and recent court rulings — the designation does not accurately reflect the realities of gig work, which critics say is far less flexible than proponents claim.

The proposed class action is one of a growing number of challenges to what critics call misclassification in a number of areas, from food delivery to healthcare to trucking.

“Employee misclassification in the pizza delivery industry is pervasive. This class action lawsuit seeks to challenge this practice and improve the work of Pizza Hut delivery drivers,” said Andrew Monkhouse of Monkhouse Law, the firm jointly representing Marinov.

According to the class action lawsuit, “every aspect” of Marinov’s work was “dictated in great detail” by the Pizza Hut app. Delivery drivers cannot choose which orders to fulfill or refuse orders assigned to them; they are also placed on a timer during deliveries, according to the lawsuit.

“If a driver fails to comply with app instructions, they risk discipline,” the statement read.

In addition, Marinov’s contract reportedly set out instructions on how to behave at work: drivers cannot ask for tips, must report for their shift at a set time, and are prohibited from working for any reason. other businesses during these hours.

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

“Like other delivery apps, the Pizza Hut-mandated app provides significant control over when and how delivery drivers get their jobs done,” he said. “Unlike many who work on apps in the gig economy, however, Pizza Hut delivery drivers are scheduled for shifts and deliver food exclusively for Pizza Hut during their scheduled hours.”

Since delivery is ‘the backbone of the pizza industry’, Pizza Hut drivers were also ‘integral’ to the company’s core business – another hallmark of employee status, the suit adds collective.

“(Marinov) worked for the defendants for more than a decade,” the lawsuit states. “(He) has been deprived of the benefits and security that minimum employment standards would have afforded him.”

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