California Labor Code Section 2802 requires an employer to reimburse an employee for all necessary expenses or losses incurred in direct consequence of the discharge of his or her duties, including driving expenses and cell phone use. The law further provides that the penalty for failing to reimburse an employee includes liability for the expenses plus interest, as well as attorney fees and costs incurred in obtaining reimbursement for unpaid wages. Employees can recover up to four years of un-reimbursed expenses.
In most cases, expenses can be easily calculated. However, driving expenses take in more than just gas and include items such as insurance, maintenance, and repairs. There are several different ways in which an employee may be reimbursed for driving expenses:
- Mileage Reimbursement Method – The employer reimburses the employee for miles traveled based on an agreed-upon rate. The standard rate used is the mileage rate established by the Internal Revenue Service (IRS). The IRS rate changes periodically; as of January 2010, it is 50 cents per mile.
- Actual Expense Method – Under this method, the employer looks at each and every expense, including fuel, maintenance, repairs, insurance, registration, and depreciation.
- Lump Sum Method – Under this method, the employer pays a fixed amount based on the employee's job duties, including the number of miles the employee typically drives in performing those duties. This amount can be added to the employee's base salary, so long as it is still distinguishable from the salary amount. Also, the amount must be sufficient to fully reimburse for actual expenses, and must at least equal the amount under the mileage reimbursement method.
An employee is entitled to be reimbursed for all driving expenses incurred as part of his or her job, except for the commute to and from work which is not included. Similarly, a salesperson is not reimbursed for traveling from home to the first sales call, or from the last call of the day to home, but can receive reimbursement for all trips and stops in between during the day.
If you are living in California (Los Angeles, San Francisco, Sacramento, or San Diego) and you are not being reimbursed adequately for the expenses you incur in performing your job duties, contact Kingsley & Kingsley to speak with one of our experienced labor lawyers.