Under California Labor Code 2802, the employer must reimburse their employees for vehicle expenses if they are required to use their personal vehicle for work-related activities. This does not include commuting to and from work.
There are three main ways an employer can reimburse an employee for vehicle costs. With the Mileage Reimbursement Method, the employer must reimburse the employee at a rate of $0.54 per mile driven, according to the IRS standard mileage rates. The employee must keep track of every mile driven and report them to their employer.
Such reimbursement covers:
- Fuel costs
- Maintenance costs
- Licensing and registration
- All other costs associated with operation of the vehicle
The Actual Expense Method is a method that tracks the exact expenses incurred by driving the personal vehicle for work-related activities. While this method is very accurate, it is less commonly used because it is difficult and time consuming to calculate.
The Lump Sum Method is a method in which an employer gives the employee a lump sum for vehicle expenses, and does not require the employee to track the miles driven for work-related activities. The lump sum must comply with California Labor Code 2802 by covering the actual costs of driving the vehicle for work.
Employers also have to reimburse employees for other types of business-related expenses that are incurred as a result of performing work-related duties. This includes, for instance, cell phones and plans, printing, faxes, marketing material and business cards. Note that independent contractors do not have the right to be reimbursed for their vehicle expenses.
If you believe your employer has failed to reimburse you fairly for vehicle expenses, contact an experienced employment attorney at Windsor Troy to help determine your rights.
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