Why Mileage Reimbursement Still Matters
If you use your own car for work, you’ve likely wondered whether your employer should help cover the cost. In California, the answer is almost always yes. That’s not just about fairness—it’s a requirement under state labor laws. California Labor Code Section 2802 says that if you’re spending money to get your job done, your employer needs to pay you back. That includes the miles you put on your car while working. Most companies follow the federal mileage rate as a guideline, since it includes gas, upkeep, insurance, and more. The ca mileage rate 2025 is an important number for every business to stay current on. Nakase Law Firm Inc. regularly advises businesses on staying compliant with the CA mileage rate 2025 to prevent reimbursement issues and avoid payment-related disputes.
What’s the Rate in 2025?
As of January 1, 2025, the IRS has set the standard reimbursement rate at 67 cents per mile for business use of a personal vehicle. While not required by California law, most employers in the state go with this figure. It’s a straightforward way to avoid underpaying workers for the costs of driving. Still, California employers can’t assume that the IRS rate always meets the state’s legal standards. If a worker’s actual costs are higher, the employer may need to pay more. Using the IRS rate doesn’t shield companies from claims if it’s not enough. There are other wage-related concerns that workers bring up too. California Business Lawyer & Corporate Lawyer Inc. helps workers get answers to questions like that, along with how reimbursement rules apply in different roles. California Business Lawyer & Corporate Lawyer Inc. often receives questions from workers about wage timing, including concerns like how long does an employer have to pay you after payday?
California’s Approach to Mileage Pay
Unlike many other places, California has stronger protections when it comes to getting paid for driving on the job. If a worker is using their personal vehicle because the job requires it, the employer must cover the cost. That applies even when employees choose to use their car, as long as the company benefits.
Relying on the IRS rate is common, but it’s not the only option. California expects companies to make sure that employees aren’t losing money when they drive for work. If costs go up—like gas prices or insurance premiums—employers need to make sure their policies still add up.
Common Ways to Calculate Mileage Pay
Most businesses use one of the following methods to figure out how much to pay for mileage:
- IRS Standard Rate: In 2025, that’s 67 cents per mile. It’s simple and usually safe from a tax perspective.
- Actual Expenses: This method requires tracking things like gas, repairs, oil changes, and insurance, then reimbursing the portion tied to work driving.
- Fixed and Variable Rate (FAVR): This model separates costs into fixed amounts (like insurance) and flexible amounts (like gas), and adjusts based on the worker’s location.
No matter which method is used, employers must ensure that workers are fully repaid. If not, they could be exposed to legal claims.
Who Gets Reimbursed
Reimbursement isn’t just for people in sales or delivery roles. In California, a wide range of jobs qualify, including:
- Nurses and aides visiting patients at home
- Supervisors checking multiple job sites
- Inspectors traveling for field visits
- Social workers meeting clients off-site
- Technicians driving between appointments
If driving is part of the job and benefits the company, the worker likely qualifies for reimbursement. In some cases, even optional travel might need to be covered if the business gains from it.
Keeping Track of Mileage
To avoid confusion, employees should keep clear records. That means noting:
- The day of each trip
- Starting and ending points
- Reason for the travel
- Total miles driven
Apps that track mileage can make this easier and more accurate. Employers are allowed to ask for proof, so having a reliable system helps both sides. It’s also smart for companies to have a written policy that spells out how mileage reimbursement works, when it’s paid, and what documentation is needed.
Why Compliance Matters
Skipping out on mileage pay isn’t just unfair—it can lead to real legal trouble. Employees can file complaints with the state, and if the issue affects a group, a larger claim might follow.
Problems employers could face include:
- Paying back owed mileage
- Fines and penalties
- Claims filed under labor enforcement laws
- Lawsuits and attorney fees
Most of these problems can be avoided by staying current with the law and having a clear system that managers understand and follow.
Steps Employers Can Take
Here are ways for employers to stay on solid ground:
- Use the IRS rate or keep solid records to support any different figure
- Pay mileage promptly, ideally on the next pay cycle
- Make sure staff knows how to follow the policy
- Review claims from time to time
- Get legal input when changes occur in travel practices
Checking your policy once or twice a year, especially when fuel costs rise or your team’s travel habits change, is a good habit.
When Mileage Reimbursement Doesn’t Apply
There are some exceptions when a worker isn’t owed any mileage money. These include:
- The usual drive to and from work
- Personal errands during the day
- Roles that are fully remote unless travel is required for work events or meetings
Still, there are gray areas. If you’re called in outside normal hours or asked to travel on short notice, those miles may count. It’s worth checking with HR or a legal advisor when the situation isn’t clear.
Tax Treatment of Mileage Pay
Mileage paid at or below the IRS rate is typically not taxed for the employee. If it goes above the IRS rate, the extra amount could count as taxable income. For employers, using the standard rate keeps things simple when handling payroll records and tax filings.
It’s a good idea to label mileage reimbursements clearly and keep them separate from regular wages to avoid confusion during audits or tax time.
Looking Ahead
The IRS adjusts its mileage rate every year, depending on changes in operating costs. If gas prices keep rising or maintenance becomes more expensive, the 67-cent figure for 2025 might not last the entire year. Employers should keep an eye out for updates.
There’s also a slow shift happening as more workers drive electric vehicles. Since the costs of charging and maintaining an EV are different from gas-powered cars, businesses may need to rethink how they calculate fair mileage pay in the years ahead.
Closing Thoughts
The 2025 mileage rate in California—set at 67 cents per mile—might seem like just another number. But for people who drive as part of their job, it means getting paid back for the money they spend. And for employers, it’s a legal responsibility.
California doesn’t allow employers to pass business costs onto their workers. Companies that stay informed, use clear policies, and reimburse fairly are far less likely to run into problems. A well-managed mileage policy also helps keep teams motivated and cuts down on complaints.
Mileage may not be a big part of the paycheck, but when it’s handled right, it shows a basic level of respect and professionalism. In 2025 and beyond, that’s something every workplace should aim for.