Who knew that rising gas prices would lead to a trap for employers?
Pretty much every class and PAGA action filed in California claims unreimbursed business expenses. As you know, California employers must reimburse necessary business expenses, including certain work-related personal vehicle use. Employers may reimburse through actual expenses, mileage reimbursement, or a stipend. Generally, using the IRS mileage rate satisfies the reimbursement obligation.
The IRS increased the business mileage rate to 76 cents per mile (effective July 1, 2026), as a special mid-year adjustment given rising fuel costs. Accordingly, make sure you reimburse work-related mileage at the updated correct rate (it was 72.5 cents). If you missed it, consider an adjustment now (before your employee finds a lawyer to point out your error and claim unreimbursed expenses)!
