IRS Announces Decrease in Mileage Rate
Last week, the IRS announced the standard mileage rates for 2009. Effective January 1, 2009, the standard mileage rate for business miles driven will be 55 cents per mile. This is a slight decrease from the current rate of 58.5 cents per mile, which was implemented in response to rising gas prices in the second half of 2008.
As a reminder, it is generally recommended that California employers utilize the IRS mileage rate to reimburse employees who drive in the course of their job duties. California Labor Code section 2802 requires employers to indemnify employees for all expenses necessarily incurred in the performance of their jobs. California's Department of Labor Standards Enforcement takes the position that where driving expenses are involved, reimbursement at the IRS standard mileage rate creates a presumption of compliance with section 2802. Reimbursement at a rate less than the IRS standard rate creates a presumption of non-compliance. If faced with a claim for failure to reimburse expenses, the burden would be on the employer to prove that its mileage reimbursement rate adequately covered all of the employee's actual costs of operating a vehicle for employment purposes.
Employers should review their mileage reimbursement policies for the new year to ensure compliance with California law.