In the era of COVID-19, many employers have hired additional drivers to better meet their customers’ needs by offering delivery services. Often, employers require these employees to drive their own vehicles.
The Department of Labor (“DOL”) recently issued an Opinion Letter addressing how employers may reimburse workers for their out-of-pocket expenses in a way that complies with the federal minimum wage law. The DOL’s Opinion Letter directly impacts those who drive as part of their duties, whether for deliveries or some other purpose.
Employees’ “tools of the trade”, including their use of a personal vehicle, are materials that primarily benefit employers, because they are necessary for a worker to perform their duties. Employers violate the federal minimum wage laws if employees’ wages, minus expenses, are less than the current federal minimum wage of $7.25. Thus, employers must reimburse workers for their “tools of the trade” expenses – including mileage – so that the employees’ effective hourly rate is not less than $7.25. Employers can rely on approximations of employees’ expenses, but those estimates must be reasonable. The DOL also indicated that an employer would be safe in using the IRS business standard mileage rate.
Ultimately, workers using their own vehicles for the benefit of their employers (like delivery drivers) are entitled to reimbursement for out-of-pocket expenses, like mileage. If your employer is not reimbursing you for your mileage, calculate whether those expenses bring your hourly rate under $7.25. And if your employer is reimbursing your mileage using an alternative method to the IRS business standard mileage rate, you should double-check if your effective hourly rate falls below minimum wage.
Shavitz Law Group is here to help. If you have questions about whether your employer is violating federal requirements, or if you have any other employment concerns, please do not hesitate to call us for a free consultation at (800) 616-4000.
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Gregg Shavitz, Shavitz Law Group, 951 Yamato Rd Ste 285, Boca Raton, FL and 800 3rd Ave, Suite 2800, New York, NY. Lawyers licensed in states including FL, NY, NJ, and TX. The choice of a lawyer is an important decision and should not be based on advertisements alone.