The Complete Guide to California Mileage Reimbursement Law
Workers in California are entitled to mileage reimbursement for distances they travel in their own vehicle, according to California mileage reimbursement rules.
What Is California Mileage Reimbursement?
Mileage reimbursement is a type of state- and federally-regulated business expense designed to protect employees from having to absorb the costs of driving their own vehicles for work. These costs include fuel, maintenance, repairs, insurance, registration, and depreciation.
There is no federal law or regulation that states employees must receive California mileage reimbursement for miles or other expenses that they incur. However, the state of California requires employers to reimburse employees for work-related miles driven according to the California Mileage Reimbursement. This is because California’s employees are protected when they drive an automobile for business purposes.
California employers are not required to reimburse employees at the IRS mileage rate, known as the fixed and variable costs of operating an automobile and reimburse the total expenses. However, it is easier to reimburse at the IRS rate because it does not require perfect record-keeping of receipts and miles driven.
If you are using your personal vehicle for work-related purposes, beyond getting to work and going from work, employers have to reimburse incurred expenses, as well as every business-related travel expense. In case your employer is not properly reimbursing you for those expenses, you may be entitled to take legal action. Contact the trusted employment lawyers at Dychter Law Offices to get more information about state employment law and how it may apply to you.
What Is the Current Mileage Rate in California?
At the beginning of 2020, employees saw their California mileage rate drop half a cent. This rate calculates the cost of using a vehicle for charity, medical purposes, business, moving, and other reasons. Here were the standard mileage costs for 2020:
- 57.5 cents per mile driven for business purposes
- 17 cents per mile driven for medical or moving purposes (20 cents per mile in 2019)
- 14 cents per mile driven for charitable organizations (same as 2019)
However, as of January 1, 2021, according to the IRS, the standard mileage rates for the use of a personal vehicle for business purposes are:
- 56 cents per mile for every mile driven for business use (down 1.5 cents from the rate for 2020)
- 16 cents per mile driven for medical, or moving purposes (down 1 cent from the rate for 2020)
- The rate for miles driven for charitable organizations stays at 14 cents per mile, the same as 2020.
The business mileage rate is dependent upon the cost of operating a personal vehicle. The rate for medical purposes and moving depends on variable costs, and the charitable rate depends on expense reimbursement rates.
You can always calculate the expense reimbursment rates and cost it takes to use your vehicle instead of using the standard rate when determining business miles. This is known as the actual expense method. Many employers choose to go this route by offering a car allowance instead of reimbursing employees through the mileage reimbursement method, but don’t hesitate to reach out to a lawyer if you think you may be getting cheated out of your rightfully-owed compensation.
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When Does Travel Time Pay California Apply?
The travel time pay in California is regulated according to the state Labor Code:
“2802. (a) An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee 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.
(b) All awards made by a court or by the Division of Labor
Standards Enforcement for reimbursement of necessary expenditures under this section shall carry interest at the same rate as judgments in civil actions. Interest shall accrue from the date on which the employee incurred the necessary expenditure or loss.
(c) For purposes of this section, the term “necessary expenditures or losses” shall include all reasonable costs, including, but not limited to, attorney’s fees incurred by the employee enforcing the rights granted by this section.”
As an employee in California, you are to be paid for all the hours you work. Sometimes, the time spent working is the time you spent in your automobile for business. The hours you worked include:
- Time when you are actually working.
- Time you are doing personal things like texting or making a phone call on company time.
Here are a few instances in which an employee is to be paid for the time they travel:
- When the employer provides transportation like a bus as the mandatory form of transportation.
- When an employee is instructed to go to another work location while already at work.
- When an employee must travel overnight. They should be compensated for all aspects of travel, like going through the airport.
These costs must be verified for expense reimbursement. Based on California Labor Code 2802, your vehicle expenses incurred must be actually and necessarily incurred. In addition to standard mileage rates, additional vehicle-related expenses incurred may fall under the umbrella of reimbursement laws.
California Mileage Reimbursement Rate for Travel
Just as there are times an employee should be compensated for California mileage reimbursement for travel, there are times when the employer does not have to pay for the employee’s time traveled and other vehicle costs.
Examples of this are:
- When the employee is making their typical commute to and from work.
- When the employer offers an optional form of transportation for work-related activities and the employee chooses not to use it.
- When the employee does things on a business trip like sleep, eat out, or sight-see.
To determine how much of your travel the employer controls, you must look at your unique situation and the facts surrounding your specific case. Therefore, your best option is to choose a wage and hour attorney who is knowledgeable and experienced in travel time cases and consult with them, so you receive all the pay to which you are entitled.
How California Mileage Rate for Travel May Apply
Often, employees may wish to be paid their California mileage rate for work-related driving, but that is not all. Some issues may come up when it comes to traveling, like overnight travel.
If you travel overnight, you could receive compensation for the time you spent traveling for work. The rate for this time is known as the per diem rate. The reasons you may stay overnight are:
- Business seminars
- Weekend conferences
- Out-of-town trainings
- Meetings that involve sales
- Visiting other job sites
When you are required to be somewhere like a meeting or event outside regular business hours that requires travel by airplane and an overnight stay, you may be entitled to compensation by your employer in the form of a lump sum method or another reimbursement method.
What Is California Mileage Reimbursement Rate When Traveling?
You may wonder what your California mileage reimbursement rate is when you are traveling for work. As you may have guessed, your employer must pay for most of a business trip if required to attend for your job duties. This includes any miles driven to get to the destination. If the event is optional and allows you time off to go, you probably will not be compensated.
There are only certain times during a business trip you can be compensated under the per diem rate. When you eat at a restaurant, order room service, sleep, sight-see, or go to something purely for fun like a Broadway show, you will not be compensated since these are not considered business expenses. However, you will be compensated for your time at the airport and traveling to the hotel. When you arrive at the hotel and choose what to do next, the employer is not required to compensate you.
Claiming Gas Reimbursement California
Down half a cent from 2019, the gas mileage California reimbursement rate for 2020 is 57.5 cents per mile as discussed above. To claim gas mileage reimbursement for business-related travel, you will need to fill out one of two forms: Form 2106-EZ and Form 2106. Which one you use depends on your situation. For example, you will use Form 2106-EZ if you wish to be compensated for actual expenses (calculated by the actual expense method) when using your personal vehicle for work. Use Form 2106 for expenses related to your work vehicle.
Employers who are not appropriately reimbursing employees can face the consequences, although expense reimbursement may not seem like a big issue under the California Labor Code.
If you have any questions or are concerned that your employer didn’t properly calculate the automobile actual expenses incurred and you are not getting the money you deserve as a California worker, contact an experienced attorney at Dychter Law Offices for a free consultation — our client wins speak for themselves.