Service charge

Pizza chain Zeeks to pay $409,000 after alleged service fee violation

Seattle-based pizza chain Zeeks will pay delivery drivers around $409,000 after it allegedly failed to disclose how much of its delivery fees it paid to drivers.

The settlement announced Wednesday is Zeeks’ second in recent years. In 2019, the company agreed to pay around $285,000 to 257 drivers because of the same issue.

Service charges have become common in Seattle restaurants. Some go to employees instead of tips; others are retained by the employer.

Charges are allowed, but restaurants and other businesses are required to disclose on menus and receipts what percentage of the charge is paid directly to employees serving customers. If the business does not clearly state that it keeps a portion of these fees, the fees must be paid to the employees who serve the customers.

Without the disclosure, customers might assume service charges go to employees and tip less.

The Seattle Office of Labor Standards alleged that from 2019 to 2021, Zeeks failed to disclose the amount of its delivery fees paid to drivers. The pizza chain agreed to pay around $409,000 to 224 current and former drivers. This includes approximately $75,000 in back wages, plus interest and penalties. The allegations related to seven company-owned Zeeks locations in Seattle, according to the city.

Bureau of Labor Standards Director Steven Marchese said in a statement that not disclosing where service fees go “is a widespread problem in Seattle that needs to be addressed and resolved.”

“This settlement is an opportunity for Zeeks to improve its business practices and policies and deliver impactful change,” Marchese said.

Zeeks founders Doug McLure and Tom Vial said in a city news release that they “believe we follow the law in good faith” and that drivers don’t get small tips “on average.”

“All technical violations were temporary, immaterial, and were caused by a former software vendor, not Zeeks employees,” they said.

Launched 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 customer-paid auto-delivery charges. The lawsuit also alleged that the company failed to pay the drivers for certain hours worked and did not reimburse them for mileage.

Both sides have agreed to dismiss that case in King County Superior Court this summer, but it’s unclear if a settlement has been reached. Zeeks, his attorneys and an attorney representing the driver in that case did not immediately respond to requests for comment.