California Mileage Reimbursement Guide: Everything You Need to Know

California's labor laws mandate that employees be reimbursed for any expenses they incur while on duty, including using their personal vehicles for business-related activities. This guide offers a look at California's mileage reimbursement laws, how to calculate reimbursements, and how to ensure compliance with all relevant regulations.

California's Mileage Reimbursement Law

California's labor laws explicitly require that employers reimburse employees for expenses incurred during their work duties. This includes using their personal vehicles for business purposes. The law states: “An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful.”

Thus, employers must provide mileage reimbursement to remain compliant with state law. The Everlance mileage tracking app helps employees log their business travel and calculate reimbursements automatically, staying up-to-date on California's regulations and mileage rates.

This law mandates that employers indemnify employees for all necessary expenses or losses incurred during the discharge of their duties. The section explicitly covers business-related vehicle use, which is at the core of mileage reimbursement.

You can find the text of this law directly from California Legislative Information - Labor Code Section 2802(a)

Mileage Reimbursement in California: What’s Different?

California's laws stand out for their strict enforcement and comprehensive coverage:

1. Mandatory Reimbursement: Unlike in some other states, California requires employers to reimburse employees for necessary business expenses, including vehicle use. This ensures that employees aren't out of pocket for fulfilling their work duties.
2. Record-Keeping: To claim reimbursement, employees must provide records or receipts for their business mileage expenses. This transparency helps ensure accurate reimbursements and prevents disputes.
3. Flexibility: California allows employers to choose from various reimbursement methods, including lump-sum payments, a cents per mile rate, or actual expenses. This flexibility helps employers and employees find an arrangement that suits both parties.

California Mileage Rates for 2024

One of the more common reimbursement methods is using the current IRS mileage rate. The IRS has set the 2024 standard mileage rate for business miles at 67 cents per mile. Employers can choose to pay a higher or lower rate than the IRS standard. However, if the rate exceeds the IRS rate, the difference is considered taxable income.

Methods of Mileage Reimbursement

California employers can choose from several methods to reimburse employees for business-related travel:

1. Lump-sum Payments: Employers provide a predetermined amount to cover vehicle expenses, regardless of the miles driven.
2. Cents per Mile: This is a straightforward method where employees receive a fixed rate for every business mile driven.
3. Actual Expenses: Employees can be reimbursed for the actual costs associated with their vehicle usage, such as fuel, maintenance, insurance, and more. Receipts and records are required.
4. Mixed Approach: Employers can combine the above methods to offer a comprehensive reimbursement plan.

Mileage reimbursement in California aims to cover all costs associated with owning and operating a personal vehicle for business purposes. This includes depreciation, insurance, road taxes, leasing payments, fuel, maintenance, and more.

Mileage Record Requirements

Depending on the reimbursement method, employees may need to provide different records:

• Cents per Mile: Employees must record the miles driven for business purposes on a mileage log, including the date and destination of each trip.
• Actual Expenses: In addition to mileage logs, employees must also provide receipts for car expenses, allowing employers to calculate the business use percentage of the vehicle.

The Everlance mileage tracking app simplifies the recording process, ensuring accurate logs and helping employees meet IRS requirements.

Frequently Asked Questions

How much is mileage reimbursement in California?

California follows the IRS standard mileage rates, with the 2024 rate set at 67 cents per mile. Employers can choose to reimburse at a higher or lower rate, though any excess over the IRS rate is taxable.

How do you calculate mileage reimbursement in California?

To calculate reimbursement, multiply the miles driven for business purposes by the applicable mileage rate. For example, driving 100 miles at the 2024 rate of 67 cents per mile yields a reimbursement of $67. Alternatively, if using the actual expenses method, keep records of all relevant expenses and calculate the business use percentage.

Conclusion

California's strict labor laws ensure employees are reimbursed for business-related travel expenses. Employers can choose from various reimbursement methods, but they must adhere to these laws to avoid penalties. The Everlance app simplifies tracking and calculating reimbursements, helping both employers and employees stay compliant.