IRS Lowers Mileage Rate For 2009

The IRS announced that it will be lowering the IRS mileage rate in 2009.  Beginning on Jan. 1, 2009, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be 55 cents per mile for business miles driven. This is a change from 50.5 cents in the first half of 2008 and 58.5 cents in the second half.

California employers need to reimburse employees for miles driven for business purposes under Labor Code section 2802.  The California Supreme Court clearified some of the rules pertaining to expense reimbursement last year in Gattuso v. Harte-Hanks (click here for more analysis of the case).  The Court also held that the mileage reimbursement rate can be negotiated by parties as long as it fully reimburses the employee, and the amount does not necessarily have to be the IRS mileage rate, which is contrary to the DLSE’s opinion on the issue. 

IRS Mileage Rate To Increase 8 Cents July 1, 2008

The IRS announced yesterday that the IRS mileage rate will increase to 58.5 cents a mile for all business miles driven from July 1, 2008, through Dec. 31, 2008.  Click here to see the IRS press release.  This is an increase of eight cents from the 50.5 cent rate in effect for the first six months of 2008. Click here to read a Washington Post article on the topic.

What does this mean for California employers?

California's DLSE has maintained that employers are required to reimburse employees for business miles driven at the IRS mileage rate in order to comply with California Labor Code section 2802.  However, just last year, the California Supreme Court ruled in Gattuso v. Harte-Hanks (as discussed previously on our blog here) that the reimbursement rate does not have the be the IRS mileage rate but can be negotiated by parties as long as it fully reimburses the employee. The Court stated:

We agree that, as with other terms and conditions of employment, a mileage rate for automobile expense reimbursement may be a subject of negotiation and agreement between employer and employee. Under section 2804, however, any agreement made by the employee is null and void insofar as it waives the employee’s rights to full expense reimbursement under section 2802.
So if employers wish to reimburse employees at an amount lower than the IRS mileage rate, it is recommended that the agreement be documented and that the employer take into account any facts that would either increase or decrease the amount needed to fully reimburse the employee.