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As an employee, you may be asked to use your own vehicle to complete tasks for your boss. An employee that has a list of errands to complete may rack up a lot of work-related expenses. 

If you are using your personal vehicle for on-the-job duties, you may be unaware of the reimbursements you are entitled to as an employee. The attorneys at Mara Law Firm would like to discuss compensation for travel expenses under California law.

California Law on Business Expenses

As of this point, there is no federal law stipulating that an employer reimburse an employee for business expenses when using a personal vehicle. 

However, California law mandates that an employer reimburses his or her employees for all expenses related to their job. California Labor Code §2802 (a) states that “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.”

But what does it mean for an employee to be reimbursed for “all necessary expenditures or losses?” The law further clarifies that the employer must reimburse employees for “all reasonable costs.” 

Reasonable costs would include any expenses related to your work duties. In operating your personal vehicle, this would include repairs, maintenance, wear and tear, car insurance, vehicle registration, and fuel assistance. 

Mileage Reimbursement

Mileage reimbursement is the simplest way for an employer to reimburse employees for costs related to driving their own vehicle. Under California law, an employer is not required to reimburse employees based on the most current Internal Revenue Service mileage rate. Nonetheless, an employer would be fulfilling their obligation to reimburse reasonable costs to the employee if they choose to do so.

As of January 1, 2023, the IRS has set the standard mileage rate at $0.655 per mile for the use of cars, vans, pickups, or panel trucks for business purposes. This is a 3-cent increase from the set rate for the second half of 2022. 

These fuel assistance rates apply to hybrid, electric, gasoline, or diesel-powered vehicles. As an employee, keeping a mileage log will make it much simpler for your employer to know your miles driven. Another bonus for being reimbursed based on the IRS standard mileage rate: it is tax-free. 

In lieu of direct compensation for mileage, an employer can issue an employee a fuel card or a car allowance that is paid upfront. Although a car allowance will give employees cash on hand if they need to fill their gas tank, it is taxable. 

Pay for Travel Time

Even when you are driving, you should be receiving a wage for hours worked. In California, non-exempt employees are required to receive minimum wage for time spent traveling. Effective as of January 1, 2023, California’s minimum wage is $15.50 per hour.

If you have not received compensation for driving time, a California unpaid wage lawyer can address your situation and offer you advice regarding the next steps. 

Protocols to Protect You

Your company probably has rules that you have to follow while performing work duties.

In operating your own vehicle as part of your job, any misconduct on your behalf will ultimately be the responsibility of your employer. This is known as vicarious liability

To protect yourself and your employment status, the following protocols should be followed while operating your vehicle:

  • Don’t drink or use controlled substances
  • Don’t text and drive, use email, or make phone calls 
  • Notify your employer immediately if you are involved in an accident

A Devoted California Labor Law Firm 

Employers simply want tasks completed. An employer will not take time to make sure they are following current laws. That’s where we come in. Our firm has successfully represented thousands of employees in labor disputes. Contact us today to schedule your free consultation. 

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This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. This page was approved by attorney David Mara who has more than 20 years of legal experience in employment law.

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