Recently, a California employer was hauled into court by an employee because the employer refused to reimburse its workers for their actual automobile business expenses. Instead, the employer paid an increased commission that it contended was fully sufficient to cover an employee’s business use of his or her personal vehicle. An appeals court took the employer’s side, finding that state law permits an increased salary or commission in lieu of reimbursement for actual auto expenses or a reasonable mileage rate, so long as the increased compensation is reasonably sufficient to cover the employee’s costs.
The HR Management & Compliance Report: How To Comply with California Wage & Hour Law, explains everything you need to know to stay in compliance with the state’s complex and ever-changing rules, laws, and regulations in this area. Coverage on bonuses, meal and rest breaks, overtime, alternative workweeks, final paychecks, and more.
But now the California Supreme Court has decided to review the decision and examine whether employers are allowed to reimburse employees for work-related expenses by increasing their wages or commissions rather than by providing reimbursements.
As a result of the high court’s decision to review the case, the appeals court decision is effectively wiped off the books and is no longer good law. We’ll keep you posted.
Additional Resources:
Compensation: Employer Can Pay Increased Commission or Salary Instead of Reimbursing for Actual Employee Car Expenses, in the January 2006 issue of the California Employer Advisor