Its a free country, or at least its supposed to be. If anyone in any profession does not feel they are compensated enough for their efforts they should seek work elsewhere or learn a new skill. There is nothing wrong or demeaning in being a delivery driver, but it is a profession of “choice”. There is opportunity and every right to find something more financially rewarding.
I’d say most people go into business because they think they have a unique way in doing business that will give them an edge over the competition whether it be in better recipes, portions, advertising or operations. If I thought I could improve sales by simply increasing wages I would do it in a heartbeat. Business owners who do not fairly compensate their employees “according to market” will be subject to higher than average turnover. Turnover is costly and does not sit well with customers.
Business models are turned upside down all the time. When you have the resources, go out and start you own business and do what you think is best. If you are right, you will be very successful and everyone here would be happy for you and probably adopt some of your practices.
I used to be a regular on TTPG. You see, for a few months last year I was the one having this same argument with a handful of malcontents on that site. I, just as most of you, was amazed at these people’s inability to look past their noses or to wrap their minds around simple economic concepts. I won’t even comment on their interpretation or construction of various legislation.
I don’t think you’ll ever be able to convince gregster that he really hasn’t got a valid complaint. It comes down to this: he (and others) believe that they are entitled to:
Minimum wage or above;
$0.50+ per mile regardless of actual cost of operating the vehicle;
No or minimal insider duties; and
Tips averaging upward of $4.00. (You’ll often see people tipping in the $2+ range called cheapskates).
We are taking take-home pay of $20 per hour or more, assuming they actually pay their taxes on tips. It just doesn’t register that the labor market cannot justify that type of remuneration for a skill-set that, I hate to say it, is not that unique or valuable. Most of these guys should be ecstatic to be netting anything over $10/hr.
Just to let on where I am coming from: I delivered pizzas for about eight years, throughout my undergrad and graduate studies.
There exists an honest belief, perhaps it’s the union mentality that’s done wonders for America’s manufacturing sector, that a pizza restaurant’s main reason for existence is to make lots of money for its drivers. Everything else is secondary, and I suppose it would be in the mind of someone who recently wrote:
Underpayment of wages in violation of the law causes an ufair downard pressure on ALL wages in the same market and industry. If a competitor of your is allowed to under pay employees and also enjoy greater profits and or cheaper prices on pizzas, then you are put in a position wher you must cut costs to remain competitive. You may even have to lower wages to remain profitable.
Ignoring competitors or any employers that cheat or defy the law hurts everyone, not just their employees. If you just get another job, you are allowing the problem to continue, and that, I believe is what has happened in the pizza industry today. Wages have finally come so low and minimum wage has increased to the point that many places are now in violation of minimum wage laws. Most drivers never do the math, and therefore never know. Many owners arent even aware of what the law says. As long as people keep applying for delivery jobs, you figure the pay must be OK.
If you are paying at least minimum wage and a delivery rate that works out to at least 55 cents per mile, I got no problem with you. If you are able to pay more that minimum wage for great employees, then fantastic.
Dosen’t any of you wonder why no one has posted a single thing that refutes the facts that I have posted? Why haven’t the editors of the magazine commented on this? Have any of you asked them to comment? If what I have posted is wrong, wouldnt you all just love to see an article that defines just how little you are allowed to reimburse drivers? I mean, why reimburse them at all, right? Think about that. Nick keeps saying ‘ask an attorney’, have any of you? Please post your attorneys legal position on this matter and what law he or she says relives anyone from fully reimbursing minimum wage drivers.
Call the DOL and ask them if you have to pay for uniform shirts your minimum wage employees are required to wear.
They will say yes. Why is that?
Then ask the same person if you are required to pay mileage and see what they say. Odds are they will say “No! You are not required to pay mileage to your employees!”
“HA!” You think. Gregster is a fool!!!
Then ask again this way "What if I just pay minimum wage, but I require my drivers to use their own cars to deliver my product… Do I have to pay them for the use of their car, and if so, how much?
What do you think they will say then? My guess is that the person won’t know what to say.
You could follow on with this "Well why do I have to pay for their uniforms? Why do I have to do that?
The likely reply “The FLSA does not require that employees wear uniforms. However, if the wearing of a uniform is required by some other law, the nature of a business, or by an employer, the cost and maintenance of the uniform is considered to be a business expense of the employer. If the employer requires the employee to bear the cost, it may not reduce the employee’s wage below the minimum wage of $6.55 per hour effective July 24, 2008 and $7.25 per hour effective July 24, 2009. Nor may that cost cut into overtime compensation required by the Act.”
Shop Owner: " Did you just read that off of a sheet?"
DOL employee: “Yes”
Shop Owner: Oh, OK, so what about mileage, do I have to pay that?"
DOL employee: “Uh…” (Silence then keyboard clicking and ruffling papers) “Ummmm… I don’t see anywhere where is says you have to pay that. Nothing about mileage in here sir.”
Shop Owner: “So I don’t gotta pay for their gas?”
DOL employee: “Um… Nothing about ‘gas’ here either sir”
Shop Owner: "Well, that’s just great! You just saved me a TON of money there son! You wanna free pizza dinner?!?! I have been reading some wild things from some nut on the internet that says I gotta pay ‘actual costs’ or 55 cents a mile to my minimum wage employees when I make them use their own cars to deliver my pizzas! Dang, he had me going there for a while! I was actually beginning to believe he had something! Boy was he wrong! Wait till the guys hear this! Can you believe this nut named gregster said that some crap posted at the DOL website says that no deductions may be made from a minimum wage employees pay that might reduce their pay below minimum wage!!! Can you believe that!
DOL employee: “Well, yes sir I can. That IS true.”
Shop Owner: "WHAT! You just said I didn’t have to pay mileage! You said it yourself!
DOL employee: “Um , er… Well Yes, I did say that… but… um…”
Shop Owner: “Well, what is it boy, spit it out!”
DOL employee: “Why are you yelling at me?”
Shop Owner: “Oh never mind, he said you wouldn’t understand any way. He said if that happens I was to read you this:”
From page 31 of the DOL Field Operations Handbook (FOH) chapter 30
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
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.
DOL employee: “Wow! Yes, sir all of that is true! We have that book right here in the office, word for word!”
Shop Owner: “So what does it mean, do I gotta pay mileage or not?!!!”
DOL employee: “Well sir, I’m not allowed to give legal advice…”
Shop Owner: “WHAT?!”
DOL employee: “Well sir, I just can’t give legal advice, I can just tell you what our laws and regulations say. I can’t tell you what you should do. That part you read to me says “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.†That MW part in there means Minimum Wage!â€
Shop Owner: “I know that!â€
DOL employee: “I’m just sayin’…†“Oh here’s more that you read to me “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.†There your answer right there!â€
Shop Owner: “WHAT ANSWER?!?!â€
DOL employee: “To your question about the standard mileage rate and the business use of a car!â€
Shop Owner: “So, do I gotta pay it or not?!?!?!â€
DOL employee: “ I’m sorry sir, we are not allowed to give out legal advice…â€
(CLICK!)
DOL employee: Sir?.. Sir? Do I still get my free pizza???
Where to Obtain Additional Information
For additional information, visit our Wage and Hour Division Website: http://www.wagehour.dol.gov and/or call our toll-free information and helpline, available 8 a.m. to 5 p.m. in your time zone, 1-866-4USWAGE (1-866-487-9243).
DEAR CARRIE: I work for a staffing company, which requires that I use my car to visit clients. But my company doesn’t give me a car allowance, nor does it give me any money toward the cost of operating my car, such as the 50 cents per mile required by law. If I am involved in an accident while visiting clients, is the company liable? A co-worker on a visit saw a car sideswipe her parked vehicle. The driver fled the scene, and because my co-worker was unable to get a license plate number, she could not file a claim with the other driver’s insurance company. She got estimates for the repairs and asked our human resources department if the company would pay. HR in turn asked the legal department, which said the company wasn’t liable. Can this be true? If one of us is injured in an accident while on company business, would the company be liable?
Unpaid Wear and Tear
DEAR UNPAID: I’ll start with the mileage question first because it’s the simplest. I need to correct you on two points.
First, the Internal Revenue Service’s maximum deductible rate for business mileage is now 58.5 cents per mile, an amount that took effect on July 1 to run through the end of the year. Normally rate changes take effect on Jan. 1 and run to Dec. 31, and the IRS did announce a new rate of 50.5 cents last Jan. 1 but raised that in midyear to the 58.5 cents because of surging gas prices.
Second point: No law requires your employer to pay you anything for using your car for business, even though the company requires you to do so.
(California law does though)
“Federal and New York State law does not require reimbursement for gasoline and related expenses incurred when an employee uses his or her own vehicle while working,” said employment attorney Carmelo Grimaldi, a partner at Meltzer, Lippe, Goldstein & Breitstone in Mineola.
The IRS business mileage rate is set for tax purposes. If an employer were to reimburse you less than 58.5 cents per mile, you might be able to deduct the difference as an expense on your income taxes. If the company were to pay you more than the 58.5 cents, you’d have to declare the extra amount as income.
But the bottom line is that the company doesn’t have to pay you for mileage. Every law, however, has exceptions.
If your employer requires you to use your car and you are a nonexempt employee - which generally means you are paid by the hour and must be paid at least the minimum wage - your rate of pay must equal at least $7.15 an hour, the New York State minimum, once you subtract your weekly vehicle business expenses from your gross pay, said employment attorney Richard Kass, a partner at Bond, Schoeneck & King in Manhattan. But if your employer doesn’t care how you get from place to place, whether by car or public transportation, “the rule would not apply, and the employee is out of luck,” Kass said.
You wouldn’t have any recourse on the minimum wage regulation, either, if you are exempt, meaning you are exempt from minimum wage. Exempt employees fall into the executive, professional, administrative and outside-sales categories.
If you were injured while driving on business, both lawyers said you would be covered by workers’ compensation benefits.
“If an employee is injured on the job, whether in a car or not, she will be covered by workers’ compensation insurance,” Kass said.
But Grimaldi points out that workers’ comp covers injuries, not damages to a vehicle or other property.
Workers’ comp insurance “provides cash benefits and/or medical care for workers who are injured or become ill as a direct result of their job,” Grimaldi said.
Even if you have no recourse on being reimbursed for any damage to your car, Kass advises you to ask the company to double-check its insurance policy to make sure employees aren’t covered by property losses or damage while workers are on company business.
Carrie Mason-Draffen welcomes workplace questions, though she cannot respond to every query. Some may be edited for length and clarity. Contact her with your questions at 631-843-2450, or e-mail her at carrie.draffen@newsday.com. Send a letter to Dear Help Wanted, Business Desk, Newsday, 235 Pinelawn Rd., Melville, NY 11747-4250. Your name and number won’t be published.
Just for a little clarification purposes for New York. A Foodservice worker who receives tips has a minimum wage of $4.60 per hour. As long as their tips bring them up to the minimum wage of $7.15 per hour. The employer is required to cover the difference if it is not met.
The arguement here has to do with the driver having expenses that gregster feels he should be reimbursed for outside of the tips or hourly pay. He feels that drivers should be paid the 55 cents per mile that the IRS allows as a deduction on top of an hourly wage and tips. Reading part of Gregsters supplied links, this is not completly true. He is constantly posting that tips above the tip credit cannot be used to cover expenses, and even if we assume that this can be stretched to cover automobile costs(it specifically references uniforms) there is more to this that is worth exploring:
tips in excess of statutory tip credit may not be credited against uniform purchase and maintanence costs
.
This does allow for (as there is a specific example on page 39 of gregsters link included below) a place that does not use any or all of the statutory tip credit to use it towards the reimbursement costs that are mandated.
So if you pay your drivers a wage above or equal to your required minimum wage for non tipped employees you can use the amount of the full allowable tip credit to go towards milege reimbursement. In florida this amount would be $3.02 per hour and the federal max tip credit would be $4.42 per hour. If using the IRS’s 55 cents per mile, if your pay per delivery plus the amount of the tip credit you can use towards this is equal to or above the 55 cents per mile you are in compliance. Please understand this is just my uneducated opinion and interpretation of what I read and I encourage all to seek out a professionals advice!!! Please don’t be foolish enough to take my advice as for as labor compliance laws go.
You all keep getting hung up on the word “Uniforms” when referenced in the Fact Sheets. It doesn’t matter what the money is spent on as long as the item is for the ‘benefit of the employer’.
Except for the provisions of tip-credit, the entire minimum wage must be paid “Free and Clear” with no part of the wage ‘kicked back’ to the employer in any way.
When you under-pay mileage to a minimum wage employee, even one who makes tips, with or with out tip credit, you are causing the employee to kick back part of the cost of operating the vehicle to your business in the form of free delivery service that benefits your company. It is as simple as that.
This is the actual law in the Code of Federal Regulations that is the basis for the wording for the following simplified statement:
“tips in excess of statutory tip credit may not be credited against uniform purchase and maintenance costs”
29 CFR 531.35 - Free and clear'' payment; kickbacks.‘’
Section Number: 531.35
Section Name: Free and clear'' payment; kickbacks.‘’
Whether in cash or in facilities, ``wages'' cannot be considered to
have been paid by the employer and received by the employee unless they
are paid finally and unconditionally or free and clear.'' The wage requirements of the Act will not be met where the employee kicks-
back’’ directly or indirectly to the employer or to another person for
the employer’s benefit the whole or part of the wage delivered to the
employee. This is true whether the ``kick-back’’ is made in cash or in
other than cash. For example, if it is a requirement of the employer
that the employee must provide tools of the trade which will be used in
or are specifically required for the performance of the employer’s
particular work, there would be a violation of the Act in any workweek
when the cost of such tools purchased by the employee cuts into the
minimum or overtime wages required to be paid him under the Act. See
also in this connection, Sec. 531.32(c).
THAT is the whole thing right there. THAT is why you must fully reimburse minimum wage employees for “uniforms” or Mileage, or anything else you require them to purchase “for the employers benefit”.
This section explains the law further, but basicly says the same thing, you cant give an employee a ‘facility’ such as a uniform that benefits the employer, and them charge them for it.
(a) ``Other facilities,'' as used in this section, must be something
like board or lodging. The following items have been deemed to be within
the meaning of the term: Meals furnished at company restaurants or
cafeterias or by hospitals, hotels, or restaurants to their employees;
meals, dormitory rooms, and tuition furnished by a college to its
student employees; housing furnished for dwelling purposes; general
merchandise furnished at company
stores and commissaries (including articles of food, clothing, and
household effects); fuel (including coal, kerosene, firewood, and lumber
slabs), electricity, water, and gas furnished for the noncommercial
personal use of the employee; transportation furnished employees between
their homes and work where the travel time does not constitute hours
worked compensable under the Act and the transportation is not an
incident of and necessary to the employment.
(b) Shares of capital stock in an employer company, representing
only a contingent proprietary right to participate in profits and losses
or in the assets of the company at some future dissolution date, do not
appear to be facilities'' within the meaning of the section. (c) It should also be noted that under Sec. 531.3(d)(1), the cost of furnishing facilities’’ which are primarily for the benefit or
convenience of the employer will not be recognized as reasonable and may
not therefore be included in computing wages. Items in addition to those
set forth in Sec. 531.3 which have been held to be primarily for the
benefit or convenience of the employer and are not therefore to be
considered facilities'' within the meaning of section 3(m) include: Safety caps, explosives, and miners' lamps (in the mining industry); electric power (used for commercial production in the interest of the employer); company police and guard protection; taxes and insurance on the employer's buildings which are not used for lodgings furnished to the employee; dues’’ to chambers of commerce and other organizations
used, for example, to repay subsidies given to the employer to locate
his factory in a particular community; transportation charges where such
transportation is an incident of and necessary to the employment (as in
the case of maintenance-of-way employees of a railroad); charges for
rental of uniforms where the nature of the business requires the
employee to wear a uniform; medical services and hospitalization which
the employer is bound to furnish under workmen’s compensation acts, or
similar Federal, State, or local law. On the other hand, meals are
always regarded as primarily for the benefit and convenience of the
employee. For a discussion of reimbursement for expenses such as supper money,'' travel expenses,‘’ etc., see Sec. 778.217 of this
chapter.
Since you ignored my question, I’ll ask once more - since it is critical to your position.
You keep quoting the IRS mileage that is allowed for tax purposes. However, what you quote doesn’t say anything about that - in fact, it says “your rate of pay must equal at least $7.15 an hour, the New York State minimum, once you subtract your weekly vehicle business expenses from your gross pay”.
So, I ask again - is it the smaller of 58.5 cents per mile or actual expenses - or the larger of the two?
Seems to me that if I was arguing your side on this debate, it would definately have to be the larger of the two. And in that case, I go back to my many questions about that - which you didn’t answer. What about the guy who needed the new tire? What about the guy who needed a new water pump?
If you want to have a reasonable debate on this subject you should at least attempt to participate in the debate by answering these questions without simply requoting the same thing over and over again. Please scroll back to my last post and see my questions for you.
So is my above interpretation of this section incorrect? Remember this is from 1988 when minimum wage was $3.35 per hour(your link, not mine).
from page 39 of http://www.dol.gov/esa/whd/FOH/FOH_Ch30.pdf
On the other hand, where the employer pays $2.50 per hour in cash wages and claims a tip credit of $1.34 per hour and the employees recieve not less than $1.34 per hour in tips, the employees’ R/R is $3.84 per hour. In such cases, deductions of up to 49 cents per hour ($3.84 - $3.35) may be made for such things as uniform purchases and maintenance without cutting into the required MW
Now that I’ve had a chance to think about it, the law basically says employees must be kept above minimum wage, even after accounting for expenses. In light of that, the larger of the two would apply. If an employees vehicle expenses were more than 55 cents per mile, as in the Ferrari example, the larger amount must be reimbursed to make the employees net pay above minimum. The same would apply in a situation where a minimum wage driver who drives an actual truck and pays for the truck them self and is then reimbursed. The reimbursement must always make the net pay above minimum.
If an employee is paid over minimum wage, deduction or expenses may be taken out over the course of a single pay period or longer. As long as the net pay remains above minimum wage, that is allowed. The following gives an example:
If an employee who is subject to the statutory minimum wage of $7.25 per hour (effective July 24, 2009) is paid an hourly wage of $7.25, the employer may not make any deduction from the employee’s wages for the cost of the uniform nor may the employer require the employee to purchase the uniform on his/her own. However, if the employee were paid $7.75 per hour and worked 30 hours in the workweek, the maximum amount the employer could legally deduct from the employee’s wages would be $15.00 ($.50 X 30 hours).
The employer may prorate deductions for the cost of the uniform over a period of paydays provided the prorated deductions do not reduce the employee’s wages below the required minimum wage or overtime compensation in any workweek.
You are right. There is no number that is a set minimum. That number can vary from time to time and situation to situation. The minimum that number must be is whatever amount brings the employee back up to minimum wage after expenses.
The DOL offers two methods for determining what vehicle expenses are for the purpose of meeting minimum wage compliance. “Actual Cost”, and the rate published by the IRS. That rate is currently 55 cents per mile as of Jan. 1st 2009. If you choose to use the actual cost method, the associated recordkeeping must be done to account for those costs. Most businesses who follow the law choose to go the simpler route and go by the IRS rate.
Thanks for the reply. Now, let’s take this a bit further.
Let’s assume we agree on your statement above that “employees must be kept above minimum wage even after accounting for expenses.”
Help me define exactly what “vehicle expenses” are. Is the cost of the vehicle (payments) an expense? Is the cost of a new tire an expense? Is the cost of a transmission repair and expense? Are those expenses only if the breakdown happens while on the job?
Also, over what time period are these expenses to be amortized to determine if minimum wage was paid?
To summarize my current questions to you:
Exactly what are “vehicle expenses” in the context of your statement?
Over what time period are those vehicle expenses amortized to calculate if minimum wage was paid?
Re: No one is paying that much (and they don’t have to)
The vehicle expense requirement is satisfied if the payment equals the federal maximum. It does not matter what the employee is driving.
Basically, if the employee is earning minimum wage PLUS the federal mileage allowance, INCLUDING tips (which must be declared by the employee under the law) all of this discussion is moot.
I guess there must be some mightly slow stores out there where drivers don’t makes this amount and, no doubt there are store owners out there that shave this issue pretty close. Most stores however are busier than that and the drivers do pretty well considering the level of responsibility and skill required for the job.
In my market, a typical night is about 15-20 deliveries in a 3-4 hour shift. Tips average $4 or better which means that the driver makes $15 per hour on tips alone. Frequently, the tips are better than that. Our drivers get an additional $6 per hour wage. Even on the slowest nights a driver will do 8-10 deliveries and make at least $8 per hour in tips plus the $6 wage. Earnings are well above all the minimums that our esteemed driver commentator spends so much time harping on even if they were driving their own car and I paid no mileage at all. In our case, the drivers are driving my cars and burning my gas and have no vehicle expense at all.
Can we move on now? Has this topic been sufficiently covered so that the thread could be closed?
Re: No one is paying that much (and they don’t have to)
There are obviously still people with questions about this, and by the post count it seems to be very interesting to many people. If there is nothing of interest to YOU in this thread, please just ‘change the channel’ and keep surfing. Why close the discussion when others show interest in it?
I have covered this already. Tips cannot be used to cover expenses. They may be used ONLY as a ‘wage credit’ if applied properly, but otherwise are the sole property of the employee.
The wage credit permitted on account of tips under section 3(m) may
be taken only with respect to wage payments made under the Act to those
employees whose occupations in the workweeks for which such payments are
made are those of ``tipped employees’’ as defined in section 3(t).
29 CFR 531.52 - General characteristics of ``tips.‘’
Section Number: 531.52
Section Name: General characteristics of ``tips.‘’
A tip is a sum presented by a customer as a gift or gratuity in
recognition of some service performed for him. It is to be distinguished
from payment of a charge, if any, made for the service. Whether a tip is
to be given, and its amount, are matters determined solely by the
customer, and generally he has the right to determine who shall be the
recipient of his gratuity. In the absence of an agreement to the
contrary between the recipient and a third party, a tip becomes the
property of the person in recognition of whose service it is presented
by the customer. Only tips actually received by an employee as money
belonging to him which he may use as he chooses free of any control by
the employer, may be counted in determining whether he is a ``tipped
employee’’ within the meaning of the Act and in applying the provisions
of section 3(m) which govern wage credits for tips.
A tip is the sole property of the EMPLOYEE. The only exception is wage credit as noted above.