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Employee expenses going up, and so are reimbursements

July 5, 2011

Effective Friday, July 1, the IRS  increased its standard mileage rate to 55.5 cents per mile, for the last six months of 2011.  The rate had previously been 51 cents per mile.  Most employers use these rates to reimburse employees for work-required auto use.  Employers who do so should note the change, and update forms and reimbursement procedures to ensure employees are obtaining the proper amount.

California employers should also take note that no matter what method it uses to compute employee expenses, California Labor Code section 2802 requires that the employee be paid his or her “actual expenses.”  The IRS standard rate is an approximation of the actual expense an employee incurs driving her car for her employer.  Some employers use other approximations — per diem payments, allowances, increases in commission rates, and the like.  The California Supreme Court has held that employers who use the mileage method or any other approximated method of computing automobile expenses must also permit employees to prove their actual expenses were greater, and if so recover the greater amount.

So, employers, beware of rigid application of “approximations” in reimbursing employee expenses.  If the employee wants to show you what she actually paid for gas, insurance, maintenance, and wear and tear for the car trip you told her to take, let her do it.  And employees, if you feel the IRS rate (or other approximation method) isn’t covering your nut, show your employer why you think so and get the expenses you are owed.


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