Paying for uniforms and personal vehicle use
Employers may have to reimburse to avoid a minimum wage violation
By Edwin Zalewski, SHRM-CP, PHR
Many jobs require employees to wear a uniform, while other jobs simply specify a dress code. The difference can be significant because employers may have to pay for uniforms, but not for clothing needed to meet a dress code.
Many jobs also require employees to use a personal vehicle for the job, such as making food deliveries. At the other extreme, some employers provide company vehicles, but may also allow employees to use them for limited personal reasons. However, personal use of a company car may have to be counted as taxable income to the employee.
So, what are the employer’s obligations?
A uniform is a distinctive outfit that is not suitable for everyday wear, and employers often pay for uniforms. However, if an employee quits without returning the uniform, the employer may want to take a deduction from final wages for the value. In nearly all states, taking a deduction requires a signed authorization from the employee. In addition, Wisconsin law says that the employee’s authorization may be given only after the loss occurs. Most likely, an employee who quit won’t authorize a deduction for the cost of the uniform.
To avoid such loses, some employers require employees to purchase their uniforms. This is permitted if the cost does not reduce the employee’s gross pay below minimum wage. Employees who earn only minimum wage (or less, such as tipped employees) cannot be required to purchase their uniforms, since the resulting pay would be less than minimum wage.
Even where employees earn more than minimum wage, some state laws require the employer to provide uniforms at no cost to employees. Employers should check state laws on whether employees can be required to purchase uniforms.
Some employers require only a general type of clothing rather than a uniform, and employees must purchase suitable attire. For example, employees in a grocery store may have to wear a white button-down shirt with black pants. Employers do not have to pay for this clothing. In fact, if the employer did so, the value would have to be reported as taxable income to the employee. Under the IRS regulations, providing clothing that is suitable for street wear would likely have to be reported as a taxable fringe benefit.
If the clothing item is personal protective equipment (PPE), such as a welding jacket, the Occupational Safety and Health Administration (OSHA) regulations require the employer to pay for the item. Even items that might be suitable for street wear (such as winter coats provided for working in the freezer) must be purchased by the employer because employees cannot take these items home. However, employers do not have to pay for safety shoes if the footwear can be taken home.
Clothing designed to keep the employee clean rather than protect the employee from hazards (such as mechanic’s coveralls) are not considered PPE, so employees could be required to purchase them — unless the outfit qualifies as a uniform, in which case the minimum wage obligations relating to uniforms would apply.
Employers can require employees to use a personal vehicle for business. For example, many food delivery jobs require employees to provide and use their personal vehicles. Employers are not explicitly required to reimburse mileage for personal vehicle use, but doing so is a best practice, and may be required in some circumstances.
For example, if a low-wage job involves extensive driving, the employee’s out-of-pocket costs to operate the vehicle could reduce his or her take-home pay below minimum wage. A few years ago, a court in California ruled on such a situation, finding that the employee’s pay was below minimum wage after subtracting vehicle operation costs, so the employer had to reimburse the employee for those costs.
Some employers provide company-owned vehicles for business use. If so, employees generally should not be allowed to use them for personal reasons. Personal use of a company vehicle is a fringe benefit, and the value of the vehicle use must be counted as taxable income. Failing to report that income risks penalties from the Internal Revenue Service. Employees should not even use company vehicles for commuting to and from work — with one exception.
The IRS regulations provide an exclusion for “qualified nonpersonal use vehicles.” Some company vehicles, such as a large van used by an electrician, are not suitable for personal use. An employee might be allowed to take such a vehicle home for the employer’s convenience (not for the employee’s convenience). This allows the employee to travel directly from home to the first job of the day, and this commuting use does not have to be counted as a taxable fringe benefit.
From Mary Borsecnik at J. J. Keller & Associates Inc.