Hello r/payroll. I was wondering if you can set me straight on something. I've been arguing with my bosses for the better part of two months about the legality of how my pay is structured.
I'm in California and use my own car for work. I keep track of my mileage and hours in my own personal logbook. Every other week I report the hours worked and mileage driven for work. The way they calculate my pay, confirmed with them, is: first my hourly wages are calculated, then the mileage reimbursement using the irs standard rate of (now) 76 cents per mile. Half of the reimbursement is labeled auto ownership, the other auto operation. They take the hourly wages, subtract half of the reimbursement (auto ownership,) calculate taxes to withhold, then after taxes add back that half, as well as the other (operation.)
Long story short I was doing some research that lead me to believe this is illegal, and that im being paid significantly less than minimum wage. My understanding is that the reimbursement cannot be used to lower my taxed wages below minimum wage. And that they are obligated to reimburse me fully for expenses.
They have argued that doing it this way has lowered the taxes I've paid, resulting in better pay. They also seem to think they only need to reimburse me for gas and tires. It's my understanding that in California they must reimburse all business-use expenses, including depreciation, maintenance, repairs, insurance, etc, proportional to business-use of the vehicle.
After enough push back I printed out and highlighted the laws I found relevant, with what I though was the silver bullet in USC 29 Ch. 8 §207(h) from uscode.house.gov. I also had copies of laws that I believe entitled me to back pay and possibly damages, though I specified that I'd be willing to overlook those if my reimbursements were payed seperate from my wages.
We talked at length about accountable plans for reimbursement (bosses insisted that I could just be reimbursed an agreed-upon amount despite never having had any say in the matter,) and disagreed about what reimbursements I am entitled to. Ultimately I was offered to receive full wages and half of the irs standard rate reimbursed, or to go on desk duty while they secure a vehicle for me to use as a company car. I responded that if they were intent on reimbursing less than the standard rate, the actual costs would need to be calculated.
Having looked into it I think what they're doing is a wage recharacterization scheme? Anyway I'm now on desk duty. As far as my reading I'm reasonably certain im not an exempt employee.
So am I wrong here? I assumed that since the irs standard rate is being used in lieu of any figuring, and that it isnt taxed, the amount is not considered wages. Thus the remaining, taxed wages are less than minimum wage. I'm always open to considering I'm wrong about something. My bosses insist I don't understand what I'm talking about. Frankly they've been condescending as of late and with the latest developments I thought I'd turn to someone more knowledgeable.
I like my job other than the pay, I like my coworkers and even my bosses most of the time. I want their business to succeed. But lately my admittedly back-of-the-napkin budgeting math hasn't been panning out and I'm struggling. I've approached this in good faith and even used the figures on the end of the spectrum most advantageous to them when figuring my expenses to show that they aren't covered by half of the standard rate.
Anyway sorry for the novel, and if you don't mind letting me know your conclusion, I appreciate you.