As a California contractor, you likely rely on your employees to use their personal vehicles for work-related travel. The good news? California’s CSLB enforces regulations that ensure fair compensation for those miles driven. Here’s what you need to know about mileage pay:

CSLB & The California Labor Code:

The CSLB itself doesn’t dictate mileage rates, but it upholds the California Labor Code Section 2802. This law mandates employers to reimburse employees for “all necessary expenditures or losses incurred” while performing their duties. This includes mileage driven for work purposes.

Reimbursement Options:

There are two main ways to handle mileage reimbursement:

• IRS Standard Mileage Rate: This rate, set annually by the IRS, reflects the average cost per mile to operate a vehicle for business purposes. For 2024, the standard mileage rate is 67 cents per mile. It’s a simple and widely accepted method.
• Actual Expense Reimbursement: You can choose to reimburse employees for their documented gas, maintenance, and depreciation costs associated with work miles. This requires employees to keep detailed records.

Key Points for Contractors:

The Choice is Yours: You get to decide between the IRS standard rate or actual expense reimbursement.

• Employee Records: Regardless of the chosen method, it’s recommended that employees maintain accurate records of work-related miles driven (e.g., mileage logs).
• Clear Communication: Establish a clear mileage reimbursement policy within your company and communicate it clearly to your employees.

Benefits of Proper Mileage Reimbursement:

• Employee Satisfaction: Fair compensation for work-related expenses boosts employee morale and reduces out-of-pocket costs.
• Compliance with CSLB: Following California Labor Code ensures you’re operating within legal boundaries.
• Stronger Employer Brand: Demonstrating fair treatment of employees attracts and retains top talent.

Resources for Contractors:

• CSLB and Labor Code:https://www.cslb.ca.gov/ emphasizes following the California Labor Code for employee rights.
• IRS Standard Mileage Rates: [IRS standard mileage rates ON IRS (.gov) irs.gov]

By implementing a clear and compliant mileage reimbursement policy, you can build a stronger relationship with your employees and ensure your California contracting business operates smoothly.