Under California Labor Code 2802, employers are required to reimburse employees for necessary expenses incurred in executing their job duties for their employer. This reimbursement requirement may apply to the use of the employee’s personal vehicle for work purposes, such as driving between work sites. An employee’s regular commute does not typically require reimbursement, just as commute time generally is not deemed hours worked.
When determining how to reimburse an employee for use of their personal vehicle, employers may select between different methods for reimbursement including actual expense, mileage reimbursement, or a stipend method.
The California Labor Commissioner has opined that the use of the Internal Revenue Service (IRS) mileage allowance will satisfy the expenses incurred in the use of an employee’s car for work purposes, in the absence of evidence to the contrary.
Usually, the IRS announces any changes to the mileage allowance rate in the fall in connection with increases to take place at the beginning of the year. However, in response to increases in fuel prices, the IRS recently announced on June 9, 2022, that it would increase the business travel rate to 62.5 cents per mile, effective July 1, 2022. This is a special adjustment for the final six months of 2022. Employers who reimburse using the mileage reimbursement method should consider increasing their reimbursement rate accordingly.