Mileage reimbursement in California 2026: Labor Code 2802 explained
California Labor Code §2802 requires employers to reimburse all necessary business expenses — including mileage. Here's how to comply.
Why California is different
Unlike most US states where mileage reimbursement is a federal tax question, California makes it a labor-law obligation.[^ca-lc-2802] **Labor Code §2802(a)** requires employers to indemnify employees for *all necessary expenditures* incurred in the discharge of their duties. Failure to do so creates a private right of action and is a frequent driver of California PAGA (Private Attorneys General Act) suits.
For mileage, that means: if your employee uses a personal vehicle for any work outside their commute, the employer owes reimbursement, period. The IRS standard mileage rate (US$ 0.70/mile in 2025, US$ 0.72/mile in 2026 per the announced schedule) is the safe-harbor rate California courts treat as presumptively reasonable.
What counts as 'necessary'
California courts have read §2802 broadly. Reimbursable mileage includes:
- Travel between worksites in the same day. - Travel from the office to a client site and back. - Travel from home directly to a client when the employee has no fixed office (the *Gattuso v. Harte-Hanks* line of cases). - Errands for the employer (bank deposits, supply runs, delivering documents).
Not reimbursable: ordinary home-to-permanent-workplace commute, personal errands woven into a business trip (those have to be netted out).
Three compliant payment methods
California allows three ways to satisfy §2802 for vehicle costs (per *Gattuso v. Harte-Hanks Shoppers, Inc.* (2007) 42 Cal.4th 554):
1. **Actual expense reimbursement.** The employer pays the actual cost of using the personal vehicle for work, supported by receipts and a business-use percentage. 2. **Mileage reimbursement at the IRS rate.** Simplest and safest. Pay 0.70/mile for 2025 (or 0.72/mile for 2026 once the IRS publishes the new figure). 3. **Lump-sum payment.** A flat per-month allowance is allowed, but only if it actually covers the employee's reasonable costs. The employer carries the burden of proof; if a high-mileage employee's actual costs exceed the lump sum, the employee can sue for the gap.
Method 2 is what most California employers run. Method 3 is a frequent litigation source.
Documentation that survives a §2802 claim
California plaintiffs' lawyers usually request three years of mileage records (the §2802 statute of limitations). Defensible records include:
- Per-trip logs with date, origin, destination, miles, business purpose, vehicle. - The reimbursement rate applied each year. - Proof of payment (paystub line item or separate expense reimbursement, ideally separately stated). - The written reimbursement policy in effect at the time.
Quilometragem produces all four artifacts automatically and exports them to the payroll provider for separate-line treatment.
Penalties for getting it wrong
A §2802 violation triggers:
- The unpaid amount with 10% prejudgment interest. - Reasonable attorney's fees (a major cost driver). - PAGA penalties: $100 per pay period per employee for the first violation, $200 thereafter.
A mid-size employer with 50 field employees and a 2-year unreimbursed-mileage period is looking at six- to seven-figure exposure before fees.
What to do this quarter
1. Confirm your written policy names the per-mile rate and the submission cadence. 2. Move from monthly lump sums to per-mile reimbursement at the IRS rate if you have field staff with variable driving. 3. Audit the last three years for any employee paid below the IRS rate without an explicit lump-sum agreement. 4. Adopt a tool that produces per-trip records with a business-purpose field; courts treat those as the gold standard.