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I. LEGISLATIVE/REGULATORY
UPDATE Beginning on January 1, 2006, the amount employers may deduct for the reimbursement of employees who use their own cars for company business will be 44.5¢ per business mile driven. This is the standard mileage rate approved by the Internal Revenue Service to calculate the deductible costs of operating an automobile for business. This rate constitutes a 4¢ per mile reduction from the temporary rate approved by the IRS in September 2005. California law requires that employees be reimbursed for the costs associated with conducting business on their employer’s behalf. Expenses associated with operating an employee’s vehicle may be reimbursed by paying the approved “per mile” reimbursement rate (44.5¢ per mile as of January 1, 2006), paying the actual expenses incurred, or by agreeing to pay the employee a stipend or other increased compensation which is reasonably calculated to cover such costs.
NEXT: Arbitration Agreement Not Enforceable Following Employer's Breach
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