Required Reimbursement for Employee Mileage Will Increase on July 1
July 1 will be a day of change for California employers with employees who drive as part of their duties. Not only will such employees be required to utilize hands free devices when operating cell phones while driving (see our June 20 post on this subject), employers will also have to pay more to employees to properly reimburse them for their driving costs.
Section 2802 of the California Labor Code requires all California employers to reimburse their employees for all costs incurred in performing their duties, including driving and transportation costs (other than regular commuting). The California Labor Commissioner has taken the position that any employer who reimburses at less than the IRS mileage rate will have to prove that the actual expenses are less than the going rate or be subject to liability for the difference. In almost all cases, we recommend that California employers reimburse at the standard IRS mileage rate to minimize liability under section 2802 for driving expenses.
The IRS just announced that it will increase the standard mileage reimbursement rate to 58.5 cents per mile for the period July 1 through Dec. 31. The current mileage rate is 50.5 cents per mile. This eight cent increase represents an increase of almost sixteen percent (16%) and is the largest jump in mileage rates in recent history. Obviously it is fueled by the increasing cost of gasoline.
California employers should review their expense reimbursement policies and consider making modifications before the end of the month.