Part-Time Delivery Drivers Cost More Per Mile
The reasonable objection to paying drivers different rates is that a mile is a mile. The car burns the same fuel on the same route whoever is behind the wheel, so one rate per store looks like the fair and simple answer. For the running costs, that is exactly right.
It is wrong for everything else, and everything else is about half the cost of the car. This piece sets out why the cheapest driver to employ is often the most expensive one to reimburse, what share of the car an employer actually owes, and which of your drivers a single flat rate is quietly shortchanging.
Half of what a car costs does not care how far it goes
Split the cost of running a delivery vehicle in two.
- Costs that accrue by the mile. Fuel, tyres, routine maintenance. Drive twice as far and you pay twice as much. Per mile, these never move.
- Costs that accrue by the year. Insurance, depreciation, registration, sales tax and title. The insurer charges the same premium whether the car does 8,000 miles or 25,000. Per mile, these move enormously.
That second group is where the whole problem lives. Take a modeled used midsize sedan carrying $4,000 a year in fixed costs. Spread across 25,000 miles that is 16 cents a mile. Spread across 8,000 miles it is 50 cents a mile. Same car, same insurer, same policy: the figure tripled because the denominator shrank.
The employer does not owe all of it, and the IRS says how much
Nobody drives a car only for work. Those fixed costs would exist anyway, so charging an employer for the whole premium overstates what they owe. The employer owes the business-use share.
Working that share out properly needs the car's total annual mileage, business and personal, which no employer has and no driver should have to be asked for. The IRS solved this. Rev. Proc. 2019-46, section 6.02(9) publishes a safe harbour business use percentage keyed to annual business mileage alone, which is the one number a delivery POS already reports:
| Annual business miles | Business use share |
|---|---|
| 6,250 to 9,999 | 45 percent |
| 10,000 to 14,999 | 55 percent |
| 15,000 to 19,999 | 65 percent |
| 20,000 or more | 75 percent |
This table is doing more work than it looks. It requires nothing from the driver, it comes from the same authority the reimbursement is measured against, and it replaces an assumption of the employer's with one the IRS has already published. Below 6,250 miles the table simply stops, and no share applies.
Apply it and the gap narrows but does not close. Our modeled sedan costs 47.5 cents a mile for a driver doing 8,000 business miles and 37.0 cents for one doing 25,000. The part-timer still costs more. The widget above runs the same arithmetic against any combination.
Where a single flat rate actually goes wrong
Here is the same calculation across three modeled vehicles and four mileages, showing the gap against a flat 65 cents a mile. A minus figure means the rate is above what the car costs, so the driver comes out ahead. A plus figure means the driver is short.
| Modeled vehicle | 8,000 mi | 12,000 mi | 17,000 mi | 25,000 mi |
|---|---|---|---|---|
| Used compact sedan | -25.0¢ | -28.3¢ | -30.8¢ | -33.4¢ |
| Used midsize sedan | -17.5¢ | -21.7¢ | -24.7¢ | -28.0¢ |
| Older full-size SUV | +9.6¢ | +2.8¢ | -2.1¢ | -7.5¢ |
Read the top-left against the bottom-right. The flat rate overpays a compact sedan doing heavy miles by 33 cents and underpays an older SUV doing light miles by nearly 10 cents, out of the same budget, in the same month. Every figure in that grid is modeled and illustrative, but the shape of it is not: the exposure concentrates in one corner, and it is the corner with an expensive vehicle and a light schedule.
The driver who is short is the one closest to the wage floor
This is the part that turns an accounting question into a legal one. Under the Fair Labor Standards Act, an unreimbursed vehicle expense can operate as a deduction from wages. It matters when it pushes effective pay below the minimum, and the driver nearest that line is rarely the full-time closer on a long shift. It is the part-timer working fifteen hours a week.
Which is exactly the driver in the plus column above. A flat rate set from the average of a fleet is, by construction, below what the most expensive vehicles cost, and the lower the driver's mileage the further below it sits.
Courts have grown less patient with the shortcut. In Parker v. Battle Creek Pizza (6th Cir. 2024), binding in Michigan, Ohio, Kentucky and Tennessee and persuasive elsewhere, the court held that paying the IRS standard mileage rate is not automatically reasonable and that these disputes turn on case-specific evidence of actual cost. West v. BAM! Pizza Management (D.N.M., January 2026) rejected flat per-delivery reimbursement defended as a reasonable approximation.
What to do about it
- Stop treating mileage as only a payment input. The miles a driver records are also what tells you which business-use band they sit in, and therefore what their car actually costs you per mile.
- Look at your lightest schedules first. Sort drivers by annual miles ascending rather than by spend. The exposure is at the top of that list, and it is invisible if you sort by who costs the most in total.
- Pay the expensive vehicles what they cost. Paying above the IRS standard rate is allowed. The amount above it is not deemed substantiated and becomes reportable wages, so it needs splitting on the payroll line rather than avoiding.
RatesReady calculates a defensible per-mile rate for each driver from the vehicle they actually drive, filed insurance data for the store's ZIP, local fuel, and depreciation, registration, maintenance and tyres for that vehicle in that state. Fixed costs are apportioned using the driver's own recorded mileage and the IRS safe harbour above, so a part-timer and a closer in identical cars are priced differently because they cost differently. It refreshes monthly and keeps the documentation an auditor or a plaintiff's expert would ask for. It starts at $49 per location per month. If you want to see where your own fleet sits, request a demo and we will run your drivers against the same arithmetic.
Sources and limits. Vehicle costs on this page are modeled and illustrative, chosen to show the shape of the problem rather than to price any particular car. The business use percentages are the safe harbour at Rev. Proc. 2019-46 sec. 6.02(9); the standard mileage rate is $0.76 per mile, effective 1 July 2026. This page is a costing document and is not legal or tax advice. A FAVR plan carries separate eligibility conditions this page does not address. Talk to your own accountant.