No one is paying that much (58.5 cents per mile)

Sorry for all the quotes, but a new thread has been started to answer Dewar’s Pizza Bakery’s questions on this issue. It’s not fair to hijack the other thread anymore than it has been. I used entire quotes so as not to be accused of taking quote out of context.

Why don’t you just become a mail man or something.

Better yet, put yourself in the position to make a payroll. You can pay all the drivers in gold bars if you like.

Gregster I am having a hard time trying to figure out what you are trying to say…Are you saying an employer has to pay an employee that uses their car 58.5 cents per mile?..If so, I can not see anything that says that is the law…As I see it, the rate you are quoting is the amount an employee can deduct from their overall pay if they use their car for business without requiring them to keep track of expenses…So if they are paid $x.xx per hour and $X.xx per trip and at the end of the shift they have driven XX miles then they can deduct XX x $0.585 and only the remainder is considered income…

Now if you are saying most employers do not pay enough to cover actual costs, you may be right and that sucks…But the employer would not be breaking any laws…

I think it’s important to compensate drivers for using their own vehicles, but when my guys average $2-3 in tips per delivery (plus my $.75 per delivery commission), I’m just not interested in federal standards. They’re compensated well for what they do. Hell, sometimes I think I should trade them jobs.

Everybody sing with the choir . . .

CONTACT A TAX AND LABOR ATTORNEY AND DISCUSS THESE MATTERS IF THEY ARE IMPORTANT ISSUEs FOR YOUR BUSINESS!! A TAX AND LABOR ATTORNEY FAMILIAR WITH RESTAURANT AND TIPPED EMPLOYEES IS BEST.

While I appreciate Gregster and his passion for this issue, I cannot and will not take his “information” and arguments for any sort of gospel. I probably give it just slightly less credence than if another owner/operator posts it. The only valuable and reliable authority on this sort of matter for your business is a licensed tax attorney in your state. Period.

If Gregster gets your interest up and you want to pursue it, then hooray for you both. PLEASE do not accept the opinions of anyone on this discussion forum as authoritative in matters of tax laws, labor laws and/or accounting law. If you rely on our opinions to make legal and business decisions . . . and it turns out wrong . . . you will bear any and all consequences for the error.

Recent experience has shown me that participating in discussions or arguments on this topic with Gregster are fruitless, and meandering, leading to nowhere of value for pizzeria owners. He is resolving some sort of legal dispute with former employer regarding compensation and such, and this should be disclosed in case anyone new joins the fracas. Did I mention you should get an attorney?

(meditative chant) Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . . Attorney . . .

Noted by this new guy and interest in thread dropped after a quick click on “see all posts from user”.

Well put Nick. You said exactly what I was thinking.

This is my take on this whole thread… Gregster is very passionate about this issue and other issues concerning delivery drivers. He feels that delivery drivers are getting a bum deal, that delivery drivers are not treated fairly and not compensated fairly. He is passionate about changing the conditions of the delivery driver and is trying to fight the good fight. I can understand why he feels how he feels from experience as a delivery driver. Drivers do seem to get the bum deal all the way from the delivery charge issue all the way down to compensation for mileage and wear and tear on their vehicles. Is .75 per delivery a fair compensation? I don’t think so considering the rising cost of everything (except gas) Drivers take on more miles when they do this job therefore they have to spend more on maintenance and repairs. Changing your oil once a month is quite common for an average delivery driver. Gregster feels that owners and operators don’t really care about these issues so long as their wallets are getting fatter.

I do commend Gregster for fighting the fight, but there is a place for everything. And this board isn’t the place for this. It is a place for owners/operators to communicate about issues facing them and a place to help and get help.

I agree with you totally that Gregster is obviously passionate about this issue he obviously is - and from the (other) recent contributions he has made he appears, from what he has posted, to be the kind of driver/employee that most of us would want.

I would sort of agree and also disagree about this being the place to fight for the cause. I think every decent operator who values drivers and other employees would be interested in a discussion about this subject BUT what isn’t going to work (as posted several times by several people) is:

a) A long list of quotes and links on the subject - thats not a discussion its a list of comments and links
b) someone who, with respect, is not in a professional position to interpret and guide us on these issues (and provide indemity if the advice is incorrect!)
c) someone who won’t take no for an answer.

Gregster - you’ve made your point and for those of us who have concern about what we pay our guys then you have sown enough seed for us to take this issue further if we think it is an issue. However, you are (again) in danger of spoiling your good intention with overkill. There will (unfortunately) always be operators who underpay, don’t pay taxes, don’t insure, have poor work practises etc etc etc. Unfortunately its these guys in general who your gripe is with and if these guys won’t pay taxes they aren’t likely to take any notice of you.

Happy new year!

No, I am not saying that an employer has to pay an employee that uses their car 58.5 cents per mile. That IS the law in California no matter how much someone is paid, but is not federal law. However, it is federal minimum wage law that requires that employees be paid at least minimum wage, and they be fully reimbursed for expenses they incur that are business related. In other words, their wages minus business expenses must not fall below minimum wage.

If an employee is paid minimum wage, they must be fully reimbursed for the use of their vehicle. Not just for gas, but the total cost of ownership. The DOL sets two methods that are allowed to calculate this cost, the rate set by the IRS (which is also the same rate to calculate deductions on your taxes) or actual cost. As far as I know, no one in the pizza delivery industry takes the time to actually track all of the documents required to calculate ‘actual cost’, so the only other acceptable method is the IRS rate.

“Now if you are saying most employers do not pay enough to cover actual costs, you may be right and that sucks…But the employer would not be breaking any laws”

If an employer is under paying mileage to a minimum wage employee, then a minimum wage violation has occurred. That underpayment causes the employer to break minimum wage laws.

If an employee is paid well OVER minimum wage, and incurs expenses out of pocket, but the net wage remains ABOVE minimum wage, no minimum wage law is broken.

For those of you who say tips make up for that loss, you are incorrect. “Tips in excess of statutory tip credit may not be credited against uniform purchase and maintenance costs”

Here is a detailed explanation of what the law says on the matter including references:

From page 31 of the DOL Field Operations Handbook (FOH) chapter 30

http://www.dol.gov/esa/whd/FOH/FOH_Ch30.pdf

Car expenses - employee’s use personal car on employer’s business.

In some cases it is necessary to determine the costs involved when employees use their cars on their employer’s business in order to determine MW compliance. For example, car expenses are frequently an issue for delivery drivers employed by pizza or other carry-out type restaurants.
(a) As an enforcement policy, the Internal Revenue Service (IRS) standard business mileage rate found in IRS Publication 917, “Business Use of a Car” may be used (in lieu of actual costs and associated recordkeeping) to determine or evaluate the employer’s wage payment practices for FLSA purposes. The IRS standard business mileage rate (currently 28 cents per mile)(EDIT: Now it is 55 cents per mile as of Jan 1 2009) represents depreciation, maintenance and repairs, gasoline (including taxes), oil, insurance, and vehicle registration fees. In situations where the IRS rate changes during the investigation period, the applicable rates should be applied on a pro-rata basis.
(b) The IRS standard business mileage rate may be used in lieu of actual costs for FLSA purposes whether or not the employee will be able to take a deduction on his or her tax return for the business use of the employee’s car.

From page 38 of the DOL Field Operations Handbook (FOH) chapter 30

http://www.dol.gov/esa/whd/FOH/FOH_Ch30.pdf

“Tips in excess of statutory tip credit may not be credited against uniform purchase and maintenance costs”

From: Fact Sheet #16: Deductions From Wages for Uniforms and Other Facilities Under the Fair Labor Standards Act (FLSA)

https://www.dol.gov/esa/whd/regs/compliance/whdfs16.pdf

Other Items: Employers at times require employees to pay or reimburse the employer for other items. The cost of any items which are considered primarily for the benefit or convenience of the employer would have the same restrictions as apply to reimbursement for uniforms. In other words, no deduction may be made from an employee’s wages which would reduce the employee’s earnings below the required minimum wage or overtime compensation.
Some examples of items which would be considered to be for the benefit or convenience of the employer are tools used in the employee’s work, damages to the employer’s property by the employee or any other individuals, financial losses due to clients/customers not paying bills, and theft of the employer’s property by the employee or other individuals. Employees may not be required to pay for any of the cost of such items if, by so doing, their wages would be reduced below the required minimum wage or overtime compensation. This is true even if an economic loss suffered by the employer is due to the employee’s negligence.

No, I am not an Attorney, but I can read.

Thinking that tipped employees are exempt from minimum wage laws is a common misconception.

From page 38 of the DOL Field Operations Handbook (FOH) chapter 30

http://www.dol.gov/esa/whd/FOH/FOH_Ch30.pdf

“Tips in excess of statutory tip credit may not be credited against uniform purchase and maintenance costs”

From: https://www.dol.gov/esa/whd/regs/compliance/whdfs16.pdf

Employers may not avoid FLSA minimum wage and overtime requirements by having the employee reimburse the employer in cash for the cost of such items in lieu of deducting the cost from the employee’s wages.

Typical Problems

(1) A minimum wage employee working as a cashier is illegally required to reimburse the employer for a cash drawer shortage. (2) An employer improperly requires tipped employees to pay for customers who walk out without paying their bills or for incorrectly totaled bills. (3) An employer furnishes elaborate uniforms to employees and makes them responsible for having the uniforms cleaned. (4) An employee driving the employer’s vehicle causes a wreck, and the employer holds the employee responsible for the repairs, thereby reducing the employee’s wages below the minimum wage. (5) A security guard is required to purchase a gun for the job, and the cost causes him/her to not earn the minimum wage. (6) The cost of an employer-required physical examination cuts into an employee’s minimum wage or overtime compensation.

If a business owner knowingly or unknowingly violates minimum wage laws for many years, and is later sued and found to be at fault, they may be subject to many thousands of dollars of fines, damages, legal costs, and back wages.

Many of you are very passionate about the businesses that you have built and I sense that including the pride of ownership, and sweat equity, your businesses are worth very much more to you than the dollar value of all the parts that make it up. If you were to lose it all due to the crushing costs of a legal judgment you could have avoided, that would be a loss for all involved.

Please, for the sake of your own business, print out what I have quoted from the DOL, and have it reviewed by your attorney. Making sure you are in compliance with the law can only be a good investment in the security of your business, right? If you value your business, you’ll follow Nicks advice, right?

As I posted above, noncompliance with minimum wage laws can be a very expensive mistake. I think it would be a very important subject for business owners.

LATER EDIT: Where are the editors of PMQ Magazine on this issue? They are some of the most knowledgeable people YOU all know in the industry. Where are their personal and professional opinions on this matter? It seems to be a hotly debated and contentious issue, where is the article that lays out the facts for all to see?

Wouldn’t you all like to see an article that addresses this topic and answers your questions? Some of the editors do read this forum, right? Why are they silent on the issue?

I can’t speak for everyone but in my pizza shops delivery drivers are the highest earning employees. I own 2 shops which aren’t high volume shops by no means. My driver’s are paid minimum wage which is $7.15/hr, and average around $50 in tips+delivery charges Monday-Thursday and $100 in tips+delivery charges Friday-Sunday. So on average my drivers average as a whole, make over $17/hr. I believe the delivery drivers have got it pretty good! All they have to do is drive a car. They don’t have to deal with the hectic dinner rushes in the kitchen. It’s the easiest job in a pizza shop and it pays the most! I deliver 3 nights a week myself, so I know from experience. I do not feel sorry for delivery drivers. It’s a great job. Where else can a high school or college kid make $17/hour? It’s an entry level job that pays alot.

Are you trying to imply that since when tips are included drivers earn $17 an hour (before vehicle expenses) that it is OK to ignore minimum wage laws?

It’s an entry level job that requires the person to purchase and maintain thousands of dollars of equipment for the benefit of their employer. Very few if any drivers make $17 an hour AFTER expenses.

Do you mind sharing how much your drivers are paid per run and how many miles they drive round trip per delivery?

Isn’t it fair to fully reimburse a driver for the use of their vehicle to support your business?

“It seems to be a hotly debated and contentious issue”

Only since you got here. Before that, it was a topic rarely discussed and certainly not one that resulted in long threads. We have only you to thank for that. Are you done yet?

Gregster, you have posted the above quote about 30 times now. I still don’t understand why you are using that quote.

The “maintenance” in that sentence is referring to the maintenance of a uniform.

To me, it is clear as day that the above refers to uniform maintenance. The examples below your quote in the handbook refer to deductions from wages for uniform and maintenance costs.

Again, the above specifically refers to deductions from wages. I have never made a deduction from a driver’s wages for vehicle expenses. How do you figure the above applies to vehicle maintenance. “No deduction may be made…” is very clear. Unless your employer is making deductions from your wages, I can’t figure out what the above has to do with this issue.

The idea that tips can’t be used to cover vehicle maintenance costs is the entire basis of your argument. I have yet to see anything official that states that. The phrase that you keep referring to over and over again specifically refers to uniforms.

Occam’s razor - Either 1) Almost every pizzeria in the country is violating minimum wage laws, nothing has ever been done about it and you are the first to discover it, or 2) You are misinterpreting the law. Which do you think is the simplest explanation?

Have you filed a complaint with the DOL yet? Have you sued your employer? If not, why? You seem very certain in your interpretation of this, and I’m curious why you have not yet taken any action.

Roger it does sound like your drivers do okay money wise, however, I am still curious to know if they are paid reasonable reimbursement for use of their vehicles…Wages and tips have nothing to do with compensating them for use of their vehicle…

Here is why I can’t figure with your rant,

minimum wage = $8.40 per hour
average delivery distance = 2 miles
average deliveries per hour per driver= 4
average tip per delivery= $3
average number of delivery hours per day 5.5

Assuming a driver works 5 days a week and 50 weeks a year the earnings would be over $28,000 for part time work and if paid $1 per delivery $33,500. Driving 11,000 miles per year without compensation would allow the driver to deduct $6435 from their taxible income. If the driver is paid $1 per delivery this would be $5500 a year reducing the tax deduction available to $935.

Most of the drivers I have known over the years drive cars that have a value of $2500 average and pay less than $1000 a year for insurance. Fuel costs would be no more than $2900 per year for the delivery miles. So if the driver is paid $1 per delivey the gas and insurance costs of $3900 are covered leaving $1600 to cover the other maintenance costs and a tax deduction of $935.

Now that I have totally muddied the waters with all the math the delivery drivers make more than all the other staff.

I have worked in a number of jobs where I was required to provide my own tools to do the job with no compensation for the purchase or maintenance of those tools. If there was a tax deduction for the tools I would take advantage of it. The way I am seeing this issue is gregster is trying to have his cake and eat it too.

For those of you that think Drivers are underpaid or not reimbursed enough, is that just your general view, like people at Walmart or Mcdonalds and school teachers and policemen are underpaid too? Or do you really believe drivers are underpaid. Driver’s are only underpaid if you have trouble finding and keeping them.