New Option for Mileage Reimbursement in California
Posted on 10-Dec-07 by The Timekeeper
According to the California Employer Advisor, the California Supreme Court has approved an employer’s practice of paying increased salaries and commissions to cover employees’ mileage expenses.
Under California Labor Code Section 2802, employers are required to reimburse employees for necessary expenditures they incur as a result of the job. In the case of Gattuso v. Harte-Hanks Shoppers, Inc., the employees argued Section 2802 required their employer to reimburse them for actual expenses or use the IRS mileage rate.
However, the court ruled Section 2802 allows employers an additional option: to pay increased compensation (salary, commissions or both) to cover reimbursable expenses, as long as there’s a way to tell which part of the compensation is for labor performed and which is to cover business expenses.
Keep in mind, this only applies in California. If you’re paying employees in another state, you need to check with that state’s labor laws to see what’s allowed and what’s not. As always, it’s a good idea to get advice from a qualified professional before making any changes to your employee compensation policies.
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