IRS MILEAGE RATE INCREASE
Effective July 1, 2022 through December 2022, the IRS optional standard mileage reimbursement rate for business travel will increase from 58.5 cents to 62.5 cents per mile.
The IRS has stated the “IRS is adjusting the standard mileage rates to better reflect the recent increase in fuel prices . . . We are aware a number of unusual factors have come into play involving fuel costs, and we are taking this special step toIRS Announcement 2022-13. help taxpayers, businesses and others who use this rate.” This increase is the highest rate the IRS has ever published—up 4 cents from the 58.5 cents per mile rate effective for the first six months of the year, according to IRS Announcement 2022-13.
Under California Labor Code Section 2802, employers are required to fully reimburse employees for the business use of their personal vehicles that are required for their jobs, excluding routine commuting costs. In order to provide this reimbursement, employers have the option of either calculating the actual costs of employees using their vehicles or use the standard IRS mileage rate. The IRS rate is used to pay tax-free reimbursements to employees who use their own cars, vans or trucks to conduct business for their employers.
While fuel costs are a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs, the IRS noted. For cars employees use for business, the IRS set the portion of the standard mileage rate treated as depreciation at 26 cents per mile for 2022.
California courts and the Division of Labor Standards Enforcement (DLSE) have stated, absent evidence to the contrary, using the IRS mileage rate will generally satisfy an employer’s obligation to reimburse for business-related personal vehicle expenses.
What Should I Do Now?
If employees drive their personal vehicle for business purposes (other than their regular commute to and from work) and the employee is not paid an “auto allowance”, be sure to increase their mileage reimbursement rate in conformity with the IRS increased rate.
MINIMUM WAGE INCREASE REMINDER
As we reported in our May 2022 newsletter, effective July 1, 2022, all non-exempt employees covered by the Los Angeles Minimum Wage Ordinance will be required to be paid the new minimum wage of $16.04. A copy of the Wage Ordinance can be found here. The current applicable minimum wage for all covered non-exempt employees in Los Angeles is $15.00/hour.
Employers should note that “covered employees” are those who, in any particular week, perform at least two (2) hours of work within the geographic boundaries of the City of Los Angeles. This includes full-time, part-time, seasonal, or temporary employees. Businesses mainly operating outside of metropolitan Los Angeles but sending personnel into the City for even a minimal amount of time must comply with the minimum wage increase.
No impact on Exempt Employee Compensation Rate:
The increase in the Los Angeles City minimum wage has no impact on the minimum salary required for exempt employees. Such salary threshold is determined by the state’s minimum wage (currently $14/hr. for employees who work for employers with 25 or fewer employees, and $15/hr. for employees who work for employers with 26 or more employees).
Employers are reminded to post notices of current minimum wage rates in a conspicuous place accessible to all employees. Current posters for minimum wage and paid sick leave are available at https://wagesla.lacity.org/, in multiple languages.
With the recent increase in remote workers, California has approved providing required notices to employees via e-mail at the email address that the employee uses for work-related matters, provided that a hard copy notice is ALSO placed in accessible areas at the work site. In other words, emailing the notice does not eliminate the need to physically place the poster in the workplace.
Wage Theft Protection Act Notice Does Not Need To Be Updated with Minimum Wage Increase
The Labor Commissioner’s FAQ on the Wage Theft Protection Act Notice requirements pursuant to Labor Code Section 2810.5 provides that a new notice does not need to be provided to employees if the only change is a wage rate change: https://www.dir.ca.gov/dlse/faqs-noticetoemployee.html
Do I have to give a new notice every time a wage rate changes?
A: If the wage rate is the only change, notice is not required where there is an increase in a rate and the new rate is shown on the pay stub (itemized wage statement) with the next payment of wages. Note: Decreases in wage rates can only be made prospectively and not retroactively where work was performed and earned under a specified rate.
What Should I Do Now?
- Track the cities in which your employees work if they travel to different cities to ensure the employee is paid the appropriate minimum wage.
- Ensure pay stubs reflect the increased minimum wage (as well as other requirements).
This Newsletter is intended as a brief summary of employment law. While every effort has been made to ensure the accuracy of the information contained herein, it is not intended to serve as “legal advice,” or to establish an attorney-client relationship. If additional information is needed on any of the topics contained herein, please contact our office. All rights reserved. ©2022.