Delivery of food and other products has come of age. Nowadays, most food service establishments must provide some type of delivery services. This blog post will set forth five basic rules that employers must be aware of when employing hourly wage delivery drivers:
1) Inform the Driver of the Tip Credit
A “tip credit” is the difference between the amount an employee must be paid under the minimum wage law and the amount directly paid to a tipped employee. For instance, assuming that the minimum wage is $8.46 per hour and the employee is paid $5.44 per hour, the employer takes a tip credit of $3.02. The tipped employee must be made aware of this arrangement.
2) Keep Track of Tips Paid
Employers must make up the difference if tips fall below the tip credit, so employers need to keep track of the tips paid.
3) Driver’s Expenses Are Part of a Minimum Wage Analysis
Employers are also required to reimburse expenses that delivery drivers incur so their hourly wages do not fall below the minimum wage when those expenses are taken into account. Flat rates are permitted provided that they are a reasonable estimation of the costs and expenses.
4) Limit Non-delivery-Related Work
While the regulations under the Fair Labor Standards Act (FLSA) permit the employer to take a tip credit for time spent in duties related to the tipped occupation (in this case, deliveries), employers should be careful when tipped employees spend a substantial amount of time performing prep work, maintenance or duties that don’t produce tips. For example, if a delivery driver spends time between deliveries in stocking condiments, folding boxes or cleaning, the employee must be paid the full minimum wage (currently $8.46/hour in Florida) for such work because these activities are not directly related to the primary tip-producing job. Yet, if the related non-tipped duties are performed contemporaneously, or close in time, with the tipped duties, then it may be allowed.
5) A Service Charge Cannot Be Counted as a Tip
When a company imposes a service charge, it is not automatically counted toward the tip credit due to the employee. Therefore, it’s a better practice to stay away from service charges.