California Laws on Employer Paying for Travel Expenses

Employers are not liable for recreational expenses when an employee travels.

California labor laws require employers to reimburse employees for all business-related travel expenses that the employer does not pay directly. If any expense is subject to a maximum acceptable amount, the employer must provide written notice to the employee before he incurs the expense; if the employer does not do so, he must reimburse the employer for the expense in full. California statutes require the employer to issue reimbursements at least once per month, no later than the end of the month after the employee incurs the expense or remits the receipts, expense report or log the employer requires. Certain expenses are subject to Internal Revenue Service limits, and excess reimbursements may be taxable income to the employee.

Mileage -- Employee Vehicle

If the employee uses his own car for business purposes, the employer must reimburse him for the actual miles he drives at the current IRS rate, which is 51 cents per mile as of 2011. The employer may require the employee to submit a log or other record showing the beginning and ending mileages, the date, destination and purpose of the trip. The employer is under no obligation to reimburse the mileage between the employee's home and the employer's place of business.

Operating Costs -- Employer Vehicle

The employer is responsible for all expenses related to a vehicle owned by the employer but driven by the employee for business purposes. Such expenses include the actual cost of gas and oil, maintenance and repairs, insurance, registration and the payments to purchase or lease the vehicle.

Cost of Rental Vehicle

If the employee must rent a vehicle for business reasons, the employer must reimburse him for the rental costs. The employer may establish an upper limit on the cost, but the limit cannot be less than the actual cost charged by rental agencies at the location. The employer must also reimburse the employee for his fuel purchases.

Tolls and Parking

Regardless of the vehicle's ownership, the employer must reimburse the employee for tolls and parking expenses incurred for business reasons. Such fees are in addition to mileage reimbursements or other operating costs, but do not include tolls paid to commute between the employee's home and office nor parking costs at the employer's business.

Meals, Lodging and Incidentals

If the employee must travel for business reasons, the employer shall reimburse him for the cost of three reasonably-priced meals per day. The employer must reimburse the employee for the cost of his motel or hotel room. Incidental expenses, such as necessary taxi expenses, business-related mailing costs and tips, are also reimbursable expenses. Rather than reimbursing the employee for each individual expense, the employer may choose to pay a per diem rate. The IRS establishes per diem rates by geographical region, and the employer uses the IRS rate for the city to which the employee is traveling to determine a flat amount per day for the employee's expenses.

Other Travel Expenses

When an employee travels, the employer must reimburse him for necessary expenses paid to launder, clean or press clothing. The employer must reimburse the employee for business-related communication expenses, such as postage, courier services, telephone calls, faxes or shipping.

Transportation

The employer must reimburse the employee for the cost of traveling by plane, bus, car, train or boat between the employee's home and the business destination. These costs include expenses for traveling between the employee's home and the point of departure, as well as the costs of traveling between the point of arrival and the hotel. The employer may choose to pay such costs directly rather than reimbursing the employee, but the employer must still reimburse the employee for any out-of-pocket expenses, such as tips.

References

• California Department of Industrial Relations: Travel Expense Reimbursements: Sections 13700 through 13706
• Internal Revenue Service: IRS Announces 2011 Standard Mileage Rates; December 2010
• Internal Revenue Service: Publication 1542 -- Per Diem Rates; April 2011
• Internal Revenue Service: IRS Provides Guidance on Per Diem Expense Reimbursements Paid by Employers; November 2006