In Which States is Mileage Reimbursement Mandatory?
Mileage reimbursements can be a difficult topic for employers of all sizes.
Though offering mileage reimbursement is usually a good idea when employees are required to drive their personal vehicles for employment purposes, it is generally not required.
Keeping a logbook of your business-related driving for employee reimbursement? Automate trip tracking and mileage records with the Driversnote mileage tracker.
States that mandate mileage reimbursement
While there is no federal law that requires employers to provide mileage reimbursement, 3 states have enacted laws that requires employers to reimburse their employees. The 3 states are:
In this article, we will take a closer look at these state laws and how they work.
What states require mileage reimbursement to be paid out?
Below we will dive into the laws in California, Massachusetts, and Illinois. Each of which has unique laws that require employees to be reimbursed for expenses incurred when traveling in a personal vehicle for work-related purposes.
California provides a strict mileage reimbursement law requiring employers to "indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties." This includes travel-related expenses such as the costs of gas, maintenance, and other costs incurred as part of driving a personal vehicle.
The law specifies no exact rate at which employers must pay employees. However, it will need to reimburse employees for the business portion of a vehicle's use. Most employers choose to provide the Internal Revenue Service's (IRS) 2023 standard mileage rate. This means in most cases the current California mileage rate is 65.5 cents per mile.
The Massachusetts mileage reimbursement law provides a clear requirement that employers must reimburse employees for mileage and transportation expenses under Massachusetts regulation 454 CMR 27.04(4)(b). Specifically, this law states that: "An employee required or directed to travel from one place to another after the beginning of or before the close of the work day shall be compensated for all travel time and shall be reimbursed for all transportation expenses.
This requirement applies to all workers that are employed in an "occupation." The definition of this includes industries, trades, and businesses but does not include "professional service, agricultural and farm work, work by persons being rehabilitated or trained under rehabilitation or training programs in charitable, educational or religious institutions, work by seasonal camp counselors and counselor trainees or work by members of religious orders."
The amount of reimbursement required by Massachusetts law is intended to cover the costs associated with travel, such as gasoline, maintenance, insurance, and other expenses. State courts have generally recognized the standard IRS reimbursement rate of 65.5 cents per mile as an acceptable amount.
Illinois mileage reimbursement law requires that "An employer shall reimburse an employee for all necessary expenditures or losses incurred by the employee within the employee's scope of employment and directly related to services performed for the employer." This includes vehicle expenses, such as mileage that an employee incurs when using their personal vehicle for work.
However, an employer is not required to cover expenses that are a result of employee negligence or wear and tear. Employers also do not need to cover theft unless it is due to their own negligence. Additionally, employees who do not comply with the employer's written expense reimbursement policy are not entitled to reimbursement.
Employees must be given thirty days to provide documentation showing their expenses. Otherwise, they need to provide a signed statement indicating why they cannot provide proof of their expenses.
The expenses the employer must cover are not specified. But, the law is very similar to the California law, which covers the expenses of personal vehicles used for work purposes and typically uses the IRS reimbursement rate. Although, employers must pay a higher amount if needed to reimburse the costs incurred.
- 10 Most Important Tips for Gig Drivers
- Gig Work Tax Deductions You Don’t Want To Miss
- The Rise of Gig Driving: Navigating the Modern Job Landscape
Automate your logbook
Here, you'll find a collection of articles that will help you to navigate the rules for everything from reimbursing employees for their..
If you drive for Uber, Lyft, or any of the other ridesharing and delivery platforms, there is a lot you can do to maximize your profit and peace of mind.
Gig workers face a lot of expenses. Find out which of these expenses you can deduct when tax season comes around.