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Category: Mileage & Expenses

Employer’s Liability in Employee On-the-Job Auto Accidents

Driver inspecting damage after car accident

If you reimburse your employees for mileage, there are some things you should know about your role in the unlikely event that your employee is involved in an auto accident.

When employees hop in their cars to run errands for work, employers might feel released of liability – out of sight, out of mind, right? Employees are in their own cars, for which they (better) have their own insurance. If they cause an accident, that’s their problem, right? Possibly, but sometimes, the liability can fall on the employer.

  • Lawsuits can be brought against an employer for an employee’s negligent acts while working off premises
  • Workman’s comp can apply if the employee is hurt off premises while on the clock

Of course, when insurance is involved, you can bet it’s complicated so let’s take a look at how and when an employer can be held liable for employee accidents.

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Top 5 Reasons to Reimburse the Full IRS Mileage Rate

Right on targetThere is no Federal law mandating the reimbursement of mileage expenses but the IRS does set a rate that employers and employees can use as a guide. This leaves a little room for confusion though. How much should an employer reimburse? While employers may have valid reasons for reimbursing more or less, I would argue that it’s better to reimburse the full rate. Here’s why:

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When Employers MUST Reimburse Employees For Mileage & Expenses

Employee accepting reimbursementThe question of whether employers must reimburse their employees for work related expenses comes up a lot. The answer is not cut and dry, however. The FLSA does not require employers to reimburse for mileage or other expenses but some states, such as California, do. It is the responsibility of the employer to be familiar with state laws.

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Mileage Reimbursement in California

The Fair Labor Standards Act does not require that employers reimburse for mileage. This may seem a little strange – if an employee makes business-related purchases, then the business should pay for them, right? Well, the FLSA does not require it. When employees pay for work related expenses (as long as those expenses don’t bring the employee’s wage under the minimum) then the employer has no obligation to pay them back.

Except, that is, in California.

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Online Expense Tracking Is a Must for Businesses

Travel and entertainment costs represent a large chunk of the budget for most businesses. In fact, they are the second largest business expense, just behind payroll.

You would think that businesses would take the management of these expenses very seriously, given that they spend so much money on them but, surprisingly, not all of them do. Most businesses still manage their reimbursable expenses using antiquated methods like pen and paper or spreadsheets.
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Gas Prices Down, Mileage Rate Up in 2015

Last year the IRS mileage rate went down slightly, despite escalating gas prices. This year the rate went up slightly, despite decreasing gas prices.

You would think, with gas prices so low, that the mileage reimbursement rate wouldn’t go up, but instead would go down, maybe even way down. But it didn’t. It went up one and a half cents per mile to 57.5 cents on January 1st, 2015.
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Should You Pay More Or Less Than the Standard Mileage Rate

The IRS Standard Mileage Rate is the rate provided by the IRS for mileage reimbursement for business use of  a personal vehicle. In 2017, the rate is 53.5 cents per mile. The rate is a guideline based on average gas prices and average wear and tear on a vehicle (gas reimbursement is a part of this rate).

Some people want to know if they can reimburse less than the standard rate. The answer is yes. Others want to know if they can reimburse more. The answer is also yes.
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