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California Law on Employee Vehicle Mileage Reimbursement

As many people will tell you, sometimes being a good employee means incurring costs even though you should be getting paid for your time. According to California law, every employee should be reimbursed for necessary expenses they occur as part of their job, but sometimes, people don’t get their money due to a lack of awareness. Sometimes, this means covering cellphone use. Sometimes, this means paying for maintenance of a home office. Sometimes this means travel compensation.

California vehicle mileage reimbursement law is one such category designed to handle this issue, particularly seeing as usage of a personal vehicle is one of the largest categories of expense that people incur on their jobs. However, as many employment-related laws are, things can be a bit nebulous to the uninitiated. Read on to learn how exactly you can be compensated, and what to do if you’re not, even if you think you should be.

Breaking Down The Facts

Now is a good time to revisit California’s rules on vehicle mileage reimbursement, as the recent case of  Gattuso v. Harte-Hanks Shoppers, Inc., changed several parameters of the rules as well as the three different options employers have to reimburse you. For starters, the IRS sets a mileage rate each year, sometimes adjusting it mid-year as needed. As of this writing, the rate is:

  • 5 cents per mile for business miles driven, down from 54 cents for 2016.
  • 17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016.
  • 14 cents per mile driven in service of charitable organizations.

This also covers items such as:

  • Gasoline
  • The cost of maintenance (oil, lube, routine maintenance)
  • Insurance (liability, damage, comprehensive and collision coverage)
  • Licensing and registration
  • Depreciation and all other costs associated with operation of the vehicle

Per the Gattuso case, it falls on the employee to show how the “amount that the employer has paid is less than the actual expenses that the employee has necessarily incurred for work-required automobile use (as calculated using the actual expense method), the employer must make up the difference.” The California Supreme Court also concluded that the rate can be negotiated as long as the employee is fully reimbursed, not even set at the IRS mileage rate. It also added that employees cannot waive their right to be fully reimbursed.

Getting Your Money

While the three methods you can choose to get your reimbursement haven’t changed, there are some smaller changes that the Gattuso case led to. For one, the most accurate method is also the most burdensome for both sides: the actual expense method. In this method, the parties have to calculate the automobile expenses that the employee actually and necessarily incurred and then the employer separately pays the employee that amount. This includes the list of possible expenses we mentioned earlier.

However, there are other options if you don’t have the desire to put all these numbers together and decide what actually qualifies as expenses. The mileage reimbursement method allows you to pay based off of “total mileage driven.” In this case, all you need to do as an employee is record your miles driven for job duties. The employer then multiplies it by an amount approximates the per-mile cost of owning and operating an automobile.

Your third option is the lump sum method, where nothing is recorded and the employer simply pays an agreed fixed amount for automobile expense reimbursement. However, the employer needs to separately identify and document what money is paid for labor performed and what represents reimbursement for business expenses.

What If I’m Not Paid What I’m Owed?

For a start, understand that under California law, not all expenses related to travel are covered. In particular, mileage and other costs related to commuting are not covered. However, mileage reimbursement is an area where employers can fail to properly compensate employees. If this is the case, try and contact an attorney as soon as possible. Each case is unique, and in some cases, strict time limits may apply, so waiting too long may hurt your chances at compensation. In addition, an attorney will help guide you on the best way to try and present your case. Not everything has to formally go to court.

Getting what you are owed from your employer takes many forms. While vehicle mileage reimbursement may not be on the top of many people’s priority lists, it is a part of California law. Be sure to know the rules, as every bit of money you earn counts.



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