The Seattle-based pizza chain Zeeks will pay delivery drivers about $409,000 after allegedly failing to disclose how much of its delivery charge was paid to drivers.
The settlement announced Wednesday is Zeeks’ second in recent years. In 2019, the company agreed to pay about $285,000 to 257 drivers because of the same issue.
Service charges have become common at Seattle restaurants. Some go to employees in lieu of tips; others are kept by the employer.
The charges are allowed, but restaurants and other companies are required to disclose on menus and receipts what percentage of the charge is paid directly to employees serving customers. If the company doesn’t make clear that it retains a portion of that charge, the charge must be paid to employees serving customers.
Without the disclosure, customers might assume the service charge goes to employees and tip less.
The Seattle Office of Labor Standards alleged that from 2019 through 2021, Zeeks failed to disclose how much of its delivery charge was paid to drivers. The pizza chain agreed to pay about $409,000 to 224 current and former drivers. That includes about $75,000 in back wages, plus interest and penalties. The allegations involved seven company-owned Zeeks locations in Seattle, according to the city.
Office of Labor Standards Director Steven Marchese said in a statement, failure to disclose where the service charge goes “is a widespread issue in Seattle that needs to be addressed and resolved.”
“This settlement is an opportunity for Zeeks to improve its business practices and policies and make an impactful change,” Marchese said.
Zeeks founders Doug McLure and Tom Vial said in a city news release they “believe we complied with the statute in good faith” and that drivers did not receive smaller tips “on average.”
“Any technical violations were temporary, immaterial and were caused by a former software vendor, not by Zeeks employees,” they said.
Started in 1993, Zeeks now has two dozen locations across the state.
Last year, a Zeeks driver sued the company alleging it failed to pay drivers tips and the automatic delivery charge paid by customers. The suit also alleged the company failed to pay drivers for some hours worked and failed to reimburse them for mileage.
The two sides agreed to dismiss that case in King County Superior Court this summer, but it’s not clear if a settlement was reached. Zeeks, its attorneys and an attorney representing the driver in that case did not immediately respond to requests for comment.