Employers Must Pay Mileage

Employers Must Pay Mileage

Effective January 1, 2023, the IRS standard mileage reimbursement rate for cars, vans, pickups or panel trucks increased as follows:

  •      •65.5 cents per mile driven for business use (up three cents from the 2022 mid-year increase);
  •      •22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces (same as the 2022 mid-year increase); and
  •      •14 cents per mile driven in service of charitable organizations (same as past years).


You can see the IRS notice details here:  https://www.irs.gov/newsroom/irs-issues-standard-mileage-rates-for-2023-business-use-increases-3-cents-per-mile.  These rates apply equally “to electric and hybrid-electric automobiles, as well as gasoline and diesel-powered vehicles.”

California Labor Code section 2802(a) requires employers to reimburse employees “for all necessary expenditures or losses incurred…in direct consequence of the discharge of [their] duties…” This includes reimbursing employees for their work-related mileage driven in their personal vehicles, other than their normal commute to and from their first and last work locations.  If the commute to and from work on any particular day will exceed the employee’s normal commute, the employer must reimburse mileage for the difference between the employee’s normal commute and the extended commute required on that day.

As a general rule, payment of the IRS standard rates noted above is deemed to be reasonable and sufficient reimbursement.  If the employer chooses to pay rates lower than the standard IRS rates, the employer must be able to prove that the chosen rates fully compensated employees for their travel-related costs (including fuel, insurance, repairs and depreciation).  Remember that providing a fuel card is not considered sufficient reimbursement, as fuel is only one component of reimbursable travel expenses.

Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.  It is likely considered advertising.  Epps & Coulson, LLP encourages you to call to discuss these matters as they apply to you or your business.

Attorneys admitted to practice in California, New York, Colorado, Texas, and Oregon