How much should I reimburse an employee for driving?
October 23, 2011 9:14 PM   Subscribe

At what rate should I compensate a casual employee who will be occasionally driving to my office?

Someone who works for me casually remotely (1099 employee) will occasionally be coming to my office for work. She has asked that I compensate her for her driving time; this seems reasonable to me. She will be driving her own vehicle and her hourly wage will begin when she leaves the house. How much should I compensate her for driving, in addition to her hourly wage?

She suggested we consider the (revised) 2011 IRS rate of 55.5 cents per mile but said she is flexible (rate would be lower for nonprofits; this is for an exceedingly small business but not a nonprofit).

I don't have any experience with this. I'm located in the U.S. and she is my only employee. I want to be fair. Any advice?
posted by arnicae to Grab Bag (11 answers total)
Reimburse at the IRS rate. Everything else is a pain, and the rate is supposed to take into account issues like wear and tear, insurance, etc.
posted by SMPA at 9:21 PM on October 23, 2011 [2 favorites]

Reimburse at the privately-owned vehicle GSA rate (currently $0.51/mile).
posted by kdar at 9:30 PM on October 23, 2011

The GSA rate is for government-related employees. The OP doesn't indicate that she is a government.

The IRS rate is the correct one.
posted by dfriedman at 9:35 PM on October 23, 2011

I'm actually a little bit puzzled because from my understanding, commuting time isn't usually included in hourly wage. While you compensating her for JUST driving time might be reasonable, driving time on top of an hourly wage that encompassed driving time seemed a little excessive to me.

I live in Canada, so I decided to do a quick search on regulations in the US in case anything differed:

"The Department of Labor regulations provide that ordinary travel between home and work before and after performance of an employee's principal work activities is not compensable. This ordinary commuting time is excluded regardless of whether the employee reports to a fixed location or to a different job site each day. Time spent traveling between home and work in an emergency or call-out situation is compensable if the employee is required to travel a substantial distance to perform the emergency work. Travel during the regular workday, such as travel between various job sites, is compensable."

From that, I can see that customs probably don't differ that much - you're already being more generous than the majority of employees by starting the timer when she leaves the house as opposed to when she arrives.
posted by Conspire at 9:44 PM on October 23, 2011 [3 favorites]

While you're welcome to compensate her in any way you like, for me as a 1099 employee [at previous jobs] I can actually deduct my mileage or other methods of my car as a "business expense" and driving time isn't even figured in to the equation. I'd be more inclined to just give her a flat rate for mileage reimbursement and up her hourly to compensate for the occasional driving time overall. It seems weird, to me, that you'd pay extra if she were stuck in traffic or whatever. I also understand why she'd like to be compensated for that time, so it might be worth working out something where her hourly wage presumed three days off office visits or whatever and then you'd reimburse actual mileage at the IRS rate. And even then, the only time I've received mileage reimbursement is when the driving itself was a necessary part of my job not just a means of getting me to a meeting or whatever.
posted by jessamyn at 9:53 PM on October 23, 2011

Hr guy here. I see you as being a very fair boss if you are cnsidering this. The standard is to not give a shit. This is high praise from me.

Unfortunately, it may add liability for you. Is her job driving? If you compensate her for driving, she is on the clock while she is driving. If something *may* be liable.

Pleas check with an attorney, as i am just a fake one in the internet.
posted by hal_c_on at 10:03 PM on October 23, 2011 [7 favorites]

The higher of IRS rate or an hourly rate whereby the commute time included uses a negotiated and agreed upon commute time. If she makes it faster or slower should not matter.
posted by JohnnyGunn at 10:30 PM on October 23, 2011

1099 means she's an independent contractor, not an employee, right? Which would mean that you negotiate a rate that she's willing to accept and you're willing to pay. There's no "correct" in this circumstance, and worrying about fairness just clouds the waters. $0.55/mile is the amount she'll be able to deduct from her income when she files her taxes this spring, but that isn't at all binding on you. She can deduct that much if you pay her nothing extra for mileage, and she can deduct that much if you pay her $5/mile.

You might find it easier to say something like, "Well, Google maps says the drive is 10 miles and takes half an hour. You get $50/hour. $50/2+$0.55*10=$30.50. Let's round that up for traffic and parking delays, and say that I pay a $35 service call fee every time you come in. How does that sound?"
posted by jon1270 at 3:28 AM on October 24, 2011 [3 favorites]

Liability was the first thing that came to my mind as hal_c_on has stated. It would be a nightmare if an accident happened while on the clock. I would suggest one hourly rate for offsite and another, higher rate, for onsite based on whatever the additional works out to be. If the difference isn't much then perhaps simplify matters and split the difference and use that as a flat rate regardless whether onsite or not. It's certainly not unusual to have different offsite and onsite rates.
posted by jamesalbert at 4:14 AM on October 24, 2011

I think you are doing it right. If her customary work location is at home, and you are requiring her to work somewhere else, you should be paying her for her commute time. Same thing for vehicle miles- you should be compensating her for miles in excess of the usual commute.

(Unless you are already paying her at a "consultant" rate. Your $80 an hour plumber is expected to deal with their own travel. A $15 an hour temp is not.)

Using the IRS rate is just easier for all involved.

(And if you paid her less than the IRS rate, she still probably wouldn't be able to deduct anything from her taxes. Before you can deduct costs like that, they have to hit a threshold of a certain percentage of income.)
posted by gjc at 7:56 AM on October 24, 2011

Also...another thing you can do is instead of paying her $0.55/mile for driving, just figure out how much she would be driving...and then add it to her wages.

For instance, if she drives 100 miles per week...thats $55 you would owe her at the end of the week. Rather than paying her $55 for mileage...ask her if you can tack on a raise at $1.25/hour or something. and that you won't compensate her for mileage.

Seriously, check with a lawyer...I know very little about this...but this is a point you should have checked out.
posted by hal_c_on at 10:21 AM on October 24, 2011

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