The rules for employee reimbursement for mileage expenses

In 2007, the California Supreme Court addressed the issue of reimbursement of mileage expenses incurred by traveling employees under California Labor Code 2802 in the case of Gattuso v. Harte-Hanks Shoppers, Inc. The court held that when calculating costs that an employee incurred using his or her automobile, for purpose of statute requiring employers to indemnify employees for costs necessarily incurred in discharge of their duties, use of mileage is permissible, even though it is less accurate than calculating actual expenses incurred. But if employee can show that reimbursement by mileage is less than actual expenses, the employer must make up the difference.

In calculating reimbursement amount due to employee under the labor code section 2802, the employer may consider not only actual expenses that employee incurred, but also whether each of those expenses was “necessary,” which in turn depends on the reasonableness of employee’s choices.

Thus, the employer will probably not be obligated to reimburse employee for lavish or extravagant expenses such as five-star hotels, extravagant dinners, etc.