The IRS Standard Mileage rate for 2020 will be $0.575 per mile! That’s down 0.005 from 2019. The IRS announcement is here.
Employers typically use this rate to reimburse employees for the business use of their personal vehicles. In some states, it’s not required to make such reimbursement. What’s required under the federal Fair Labor Standards Act is to ensure that employees do not incur expenses that take their compensation below minimum wage.
In California, though, employers must reimburse employees for reasonably necessary business expenses, per Labor Code section 2802. And that may include business use of personal vehicles. Is the IRS reimbursement rate required? No. The employer must reimburse the actual cost of the business use. But the California Supreme Court has held that the IRS rate is presumptively fine, unless the employee can prove that he or she incurs a greater cost. That would require proof that the actual cost of operating the vehicle for business use exceeds $0.575 per mile (for such things as gasoline, wear and tear, the value of oil, the deterioration of the brake linings, tires, etc.).
Good luck with that. But there’s always some employee who tries to make that case. And there’s always some employer that wants to try to reimburse less than the IRS rate. That can be dangerous in a place like California, where gasoline alone may cost $0.15-20 per mile or more. Is it worth the risk? Hey, that’s up to you and your PAGA litigation budget.
Anyway, happy new year!