2026 IRS Mileage
The IRS just announced 2026 mileage rates, and California employers need to understand what this means for Labor Code Section 2802 compliance.
Starting January 1, 2026, the standard mileage rate increases to 70 cents per mile for business use (up from 67 cents in 2025). California employers can use the IRS rate as one acceptable method to comply with Labor Code Section 2802’s reimbursement requirements—but only if it actually covers your employees’ costs.
Here’s what matters: Section 2802 requires full reimbursement of necessary business expenses, including fuel, insurance, maintenance, and depreciation. The California Supreme Court in Gattuso v. Harte-Hanks approved using the IRS mileage rate as one of three acceptable reimbursement methods. But here’s the catch—if the IRS rate doesn’t fully cover an employee’s actual costs, you’re still liable.
⚠️This means low-mileage drivers, employees with expensive vehicles, or those in high-cost areas might not be fully reimbursed at the IRS rate. When that happens, the safe harbor disappears. Employees can challenge the reimbursement, and if they prove the rate was insufficient, you’re exposed to claims and PAGA actions.
Are you tracking whether the IRS rate actually covers your employees’ costs, or are you assuming it’s always sufficient?
If your mileage reimbursement policy uses the IRS rate without verifying it covers actual costs, consult with an employment attorney to assess your Section 2802 compliance.
#EmploymentLaw #CaliforniaEmployers #LaborCode #MileageReimbursement
Please note that this article is for informational purposes only and should not be considered and is not legal advice, and does not constitute an attorney-client relationship. It is recommended to consult with an attorney directly for specific guidance pertaining to your business or individual situation.
This post shares general information based on common patterns I see in California workplaces. It is not legal advice, does not create an attorney-client relationship, and outcomes depend on specific facts — no lawyer can guarantee a result. Past results do not guarantee or predict future outcomes. AI may have been used to create this post. All content reviewed by a CA attorney before publication. This post may be attorney advertising.
Michael Trust Law, APC, 703 Pier Avenue, Ste. B367, Hermosa Beach, CA 90254: michaeltrustlaw.com