How Much Is Mileage Reimbursement in California?

Mileage reimbursement is a common aspect of employment for individuals who use their personal vehicles for work-related activities. This practice ensures that employees are not financially burdened by expenses incurred while performing duties for their employer. Understanding the rules surrounding mileage reimbursement helps employees recover legitimate costs and allows employers to comply with legal requirements. This reimbursement covers the wear and tear, fuel, and other associated costs of using a personal vehicle for business purposes.

Understanding California’s Mileage Reimbursement Rate

California generally aligns its mileage reimbursement expectations with the rate set by the Internal Revenue Service (IRS) for business use. While the IRS standard mileage rate is often used as a benchmark, California law requires employers to reimburse employees for all actual and necessary expenses incurred in the performance of their duties. For the year 2024, the IRS standard mileage rate for business use is 67 cents per mile. This per-mile rate is designed to cover a comprehensive range of vehicle-related costs.

The standard mileage rate accounts for variable expenses like gasoline and oil, as well as fixed costs such as maintenance, repairs, tires, and the decline in value (depreciation) of the vehicle. It also considers costs associated with vehicle insurance and registration fees. Employers have the flexibility to reimburse employees at a rate higher than the IRS standard, but they cannot reimburse at a rate lower if the employee’s actual, necessary expenses exceed that amount.

Defining Reimbursable Business Travel and Expenses

Reimbursable business travel encompasses any driving an employee undertakes for work purposes beyond their regular commute. Common examples include travel to client sites, attending off-site meetings, running work-related errands, or traveling to training sessions and conferences. These trips are distinct from the routine journey an employee makes between their home and their primary workplace, which is generally considered a personal commuting expense and not subject to reimbursement.

It is important to differentiate between the per-mile reimbursement and other specific travel-related expenses. The IRS standard mileage rate covers the operational costs of the vehicle itself. However, additional expenses incurred during business travel, such as tolls and parking fees, are separate costs not included within the standard mileage rate. Employers are required to reimburse these additional, necessary expenses separately from the per-mile rate. For instance, if an employee pays a parking fee while visiting a client, that fee must be reimbursed in addition to the mileage driven.

Employer Responsibilities and Employee Entitlements

Employers in California have a clear legal obligation to reimburse employees for necessary business expenses. This requirement is codified under California Labor Code Section 2802. An expense is considered “necessary” if it is incurred for the employee’s job performance, even if the expense also provides some personal benefit to the employee.

Failing to properly reimburse employees can lead to significant consequences for employers. This may include civil penalties, interest on unpaid reimbursements, and potential legal action brought by employees to recover owed amounts. Employees cannot agree to waive their right to be reimbursed for necessary business expenses, as this right is protected by law.

Effective Record Keeping for Reimbursement Claims

Accurate record keeping is fundamental for employees to successfully claim mileage and other travel-related reimbursements. A detailed mileage log is a primary document for each business trip. It should include:
The date of the trip
The starting and ending odometer readings
The total miles driven
The purpose of the trip
The destination

Maintaining these logs helps validate the business nature of the travel and the distance covered.

Beyond mileage, employees should keep thorough records and receipts for all separate travel expenses. This includes physical or digital receipts for parking fees, tolls, and any other out-of-pocket costs incurred during business travel. Various methods can assist with tracking, such as dedicated mileage tracking applications on smartphones, manual logs kept in a notebook, or spreadsheets for digital record-keeping. Consistent and organized record-keeping streamlines the reimbursement process and provides clear documentation should any questions arise regarding a claim.