PSA of the Day: Please Tip the Pizza Delivery Driver
You are correct. First, if a state's minimum wage is higher than the feds, the state wins. Second, there are different standards for tipped employees. In NJ for example, the minimum wage is $7.15/hour (higher than the federal requirement of $6.55/hour). However, the minimum tipped wage is $2.13/hour (which matches the federal standards). The feds require that total wages paid to tipped employees + total claimed tips/tipped hours worked is greater than or equal to state minimum wage.
These calculations of hourly earnings + claimed tips vs. minimum wage are usually done on a quarterly basis and based on totals for all employees. Therefore it is possible for some employees to make below the minimum wage and others to make over it, but the IRS doesn't require calculations on an employee by employee basis.
However, I can almost guarantee that per hour, these drivers are making above the minimum wage. Even if they made $2.13/hour base, they would only need to make $4.42/hour in tips. This is probably 2 deliveries per hour. Also - if they are not reimbursed directly by their employers for mileage (which currently runs at $0.505 per mile for 2008, sure to rise for next year), they can be claiming this on their own return as a legitimate business expense. If I were their employer I would be taking the mileage expense on my own p&l just for the writeoff, and consider it a cost of doing business.
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