California Labor &
Employment Law Blog
Dec. 1 2008

IRS Announces Decrease in Mileage Rate

Topics: New Laws & Legislation

Last week, the IRS announced the standard mileage rates for 2009. Effective January 1, 2009, the standard mileage rate for business miles driven will be55 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 inthe performance of their jobs. California's Department of Labor Standards Enforcement takes the position thatwhere drivingexpenses areinvolved,reimbursement at the IRSstandard mileage rate creates a presumption of compliance with section 2802. Reimbursement at a rate lessthan theIRSstandard rate creates a presumption ofnon-compliance. If faced with a claim forfailure to reimburse expenses, the burden wouldbe on the employer to prove that its mileagereimbursement rateadequately covered all of theemployee's actualcosts of operatinga vehicle for employment purposes.

Employers should review theirmileage reimbursement policies for the newyear to ensure compliance with California law.

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