Are Business Expenses and Mileage Reimbursable?

Most employees and employers are unaware that California law requires an employer to reimburse an employee for all business expenses (including reimbursement for mileage) incurred in the discharge of his or her duties.

California Business Expense Reimbursement Law

California Labor Code section 2802 requires an employer to “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…” This code section requires that an employer pay these reimbursable business expenses as a matter of law.

Such reimbursable business expenses include mileage expenses, or payment of any other expenses incurred by the employee on behalf of the employer.

QUESTION: My employer says that reimbursable expenses (like mileage expenses) are included in my pay. Is that legal?

The answer here is that it is not legal. In fact, an employee cannot waive his or her right to reimbursement on business expenses. California Labor Code section 2804 says that any contract or payment, express or implied, made by any employee to waive the benefits of California Labor Code section 2802 (i.e., reimbursement for business expenses and reimbursement for mileage) would be null and void.

QUESTION: My employer has not paid these business expenses. How far back can I go with a wage claim to recover reimbursable business expenses and reimbursable mileage?

If a case is filed in court for reimbursement of business expenses or reimbursement for mileage, an employee can make a claim going back four years prior to the date of the filing of the complaint. For example, if a California employee files a court action for reimbursement for mileage on April 20, 2011, the employee can recover the unpaid business expenses/unpaid mileage going back to April 20, 2007.

QUESTION: I have never been reimbursed for mileage that I have driven for my employer. How do I compute what I am owed?

Generally speaking, the Division of Labor Standards Enforcement and the courts have allowed the computation of mileage at IRS rates. According to the Internal Revenue Service, these rates are as follows:

• IRS Mileage Reimbursement Rate for 2007: 48.5 cents per mile
• IRS Mileage Reimbursement Rate for 1.1.08 to 6.30.08: 50.5 cents per mile
• IRS Mileage Reimbursement Rate for 7.1.08 to 12.31.08: 58.5 cents per mile
• IRS Mileage Reimbursement Rate for 2009: 55 cents per mile
• IRS Mileage Reimbursement Rate for 2010: 50 cents per mile
• IRS Mileage Reimbursement Rate for 1.1.2011 to 6.30.11: 51 cents per mile
• IRS Mileage Reimbursement Rate for 7.1.11 to 12.1.11: 55.5 cents per mile