In a December 14, 2017 press release, the Internal Revenue Service (IRS) announced an increase for 2018 in its optional standard mileage reimbursement rates for employee business use of a personal vehicle from 53.5 to 54.5 cents.

The IRS bases the mileage rate on an annual study of fixed and variable automotive operating costs, including insurance, repairs, maintenance, gas and oil.

Under California Labor Code section 2802, employers must reimburse employees for all actual work-related expenses necessarily incurred. Many employers use the IRS mileage reimbursement rate to satisfy their reimbursement obligation.

According to section 29.2.4 of California’s Division of Labor Standards Enforcement’s Enforcement Policies and Interpretations Manual (p.99), using the IRS mileage reimbursement rate will satisfy an employer’s reimbursement obligation unless the employee provides evidence demonstrating otherwise. For example, if the employee can show the IRS reimbursement rate does not cover all of his/her actual and necessary business-related vehicle expenses, the employer must pay the difference.

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin for more information.

Helena Kobrin

December 22, 2017