Pagliacci Pizza to pay $3.75 million to settle delivery drivers’ class-action lawsuit

Notices were mailed or emailed last week to just over 1,000 former and current Pagliacci Pizza delivery drivers informing them that the Seattle-based company has settled a class-action lawsuit for $3.75 million to resolve claims involving wages, tips, breaks and mileage reimbursement, according to an attorney involved in the years-long litigation.

King County Superior Court Judge Catherine Shaffer has given the agreement preliminary approval with a final approval hearing scheduled for July 16, said Toby Marshall of the Terrell Marshall Law Group, which represents former Pagliacci Pizza driver Steven Burnett. Provided the judge signs off on the settlement agreement, delivery drivers can expect a check in the mail in early September, he said.

The 1,012 current and former delivery drivers who are considered class members will have until June 15 to exclude themselves from the class, if they choose, but don’t have to take any action to receive a payment, Marshall said. A 25% share of the settlement will pay for attorneys’ fees and expenses, with the drivers each receiving an average payout of $2,776, though the highest award will be just over $25,000, he said.

Pagliacci Pizza and its attorneys “actually took a very hard line that they didn’t do anything wrong,” Marshall said. “Our hope is this is going to be a wake up call to treat their drivers appropriately under the law.”

Pagliacci Pizza co-owner Matt Galvin acknowledged the company failed to follow state statute for a roughly six-month period in which customers weren’t notified on receipts or menus that no portion of a then $3 delivery fee went to its drivers, though he said customers were verbally notified. The company has rectified that issue.

Also at issue in the lawsuit was that drivers were required to pool their tips, which were then split with kitchen staff. Galvin said tip pooling is no longer mandatory and drivers can voluntarily select a dollar amount or percentage of a tip to share with the kitchen. He said Pagliacci also conducts regular employee surveys to ensure staff are properly paid for the hours they work.

Pagliacci delivery drivers earn $33 an hour, on average, in wages and tips, Galvin said. The company provides health care and a 401K match, Galvin said, noting drivers typically stay with the company for five years. He said the pay, benefits and employee longevity are all atypical of the restaurant industry.

Founded in 1979, Pagliacci has 24 locations and all but one of its restaurants is in King County. Of the company’s 800 employees, about 340 are delivery drivers, Galvin said.

“I’m very proud of the culture we’ve built and the kind of employees we have,” he said.

Reaching a settlement agreement allows the company to move on after nearly four years of litigation, Galvin said.

The company had initially pushed for arbitration, arguing that a brief mention about arbitration in an employee handbook barred Burnett from suing in Superior Court, according to court records in the case. Shaffer, the trial judge, denied the company’s motion to compel arbitration and Pagliacci appealed, first to the state Court of Appeals and then to the state Supreme Court.

In August 2020, the Supreme Court upheld Shaffer’s ruling and determined Pagliacci’s arbitration clause was unenforceable on numerous grounds, the court records say.

The parties then agreed to mediation and engaged in a day-long negotiation in January, according to Marshall.

The delivery-fee issue was the plaintiff’s strongest claim and 45% of the settlement will go toward paying damages based on the number of deliveries each driver made between December 2016 and August 2017, court records show. Another 21% will pay mileage reimbursement damages; 17% of the settlement will go toward tip-pooling damages; 9.5% for missed breaks; and 7.5% will be allocated for credit-card processing fees that were deducted from drivers’ tips, the records say.

Drivers will have 120 days to cash their settlement checks. Any unclaimed money will be split between Community Passageways and the Legal Foundation of Washington, according to court records. Community Passageways is a local nonprofit that creates alternatives to incarceration for youth and young adults, and Pagliacci hires its program participants, the records say. The Legal Foundation of Washington distributes money to legal-aid organizations across the state to help low-income individuals involved in civil matters.

Clarification: A previous version of this story referred to the amount Pagliacci Pizza pays its drivers. Drivers receive $33 an hour, on average, which includes wages and additional tips, according to Pagliacci Pizza co-owner Matt Galvin.