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California Labor Code section 2802 requires employers to reimburse employees for necessary expenses incurred in performing their job duties, which may include an employee’s use of their personal vehicle for work purposes, such as for work-related travel or driving between work sites.
When determining how to reimburse an employee for use of their personal vehicle, employers may select between different methods for reimbursement, including actual expense, mileage reimbursement, or a stipend.
The California Labor Commissioner has opined that the use of the Internal Revenue Service (IRS) mileage rate will generally satisfy an employer’s obligation to reimburse employees for the expenses incurred in the use of an employee’s car for work purposes, in the absence of evidence to the contrary.
Usually, the IRS announces any changes to the mileage allowance rate in the fall in connection with increases to take place at the beginning of the year. However, in response to recent increases in fuel prices, the IRS announced on July 13, 2026, that it would increase the business travel mileage rate to 76 cents per mile, effective July 1, 2026. This is a special adjustment for the final six months of 2026. Employers who reimburse using the mileage reimbursement method should consider increasing their reimbursement rate accordingly.
If you have questions about mileage reimbursement or related issues, please contact a Jackson Lewis attorney to discuss.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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