payment of mileage rules

Okay, I now think I have the hang of this - so here is my next question. Tried to delegate to payroll, but came back to HR!!

Does anyone have a good definition of when an employer should and shouldn't pay employees mileage?

Specific examples:
1) exempt manager drives from one job site to another in the course of his job - does he get mileage reimbursement or is this a requirement of his job

2) non-exempt employee works for company at two different locations - 1/2 day at one location and 1/2 day at another - do they get paid mileage between locations (they are on the clock while driving) - another question here is are they covered under worker's comp while driving

3) employee has option of using company car, but chooses to drive own car - should they get mileage reimbursement

I am new to this company and they do things a little differently than I am used to.

Your comments are appreciated! Thanks!


  • 8 Comments sorted by Votes Date Added
  • A lot of this is pretty much up to you.

    In example 1, the mileage between locations (but not to and from work at the beginning and end of the day) are considered reimbursable by the IRS. You can reimburse the employee and then claim it as a business expense. Or you can tell the employee he/she is on their own and they can claim it on their personal taxes. Or you can do something in between (you pay them 30 cents a mile and they claim 20 cents for example).

    In example 2 the answer is the same as example 1.

    If they are driving for your benefit, and especially if it is during work hours, it is covered by work comp.

    The IRS doesn't care if they had the option to use the company car or not, as the mileage becomes a tax deduction somewhere.

    This all comes down to you and your company's culture, budget, etc. We reimburse all employees for business driving at the IRS rate. We try to limit driving though to just a few (outside sales, etc) to reduce our liability and work comp expenses.

    I would first look historically and see what your company has done in the past. If you don't like it (and especially if you can't find any history) I would draft up a small mileage policy. We have a one paragraph memo that went out ages ago. We give a copy to new employees who might have mileage. It basically says that we reimburse employees for business mileage at the current IRS rate for all pre-approved trips. We have another paragraph about hotel and airfare expenses on the same memo. We also document how long they have to submit the request for reimbursement as late submissions drives the finance person (me) crazy.

    Hope this helps!

  • Our policy is fairly simple, also. If a company vehicle is available, employees are required to drive it. If not, mileage is re-imbursed at the IRS rate applicable on Jan 1 of each year.

    We re-imburse employees for all miles driven while on the clock, regardless of exempt or non-exempt status.
  • Joannie: do your employees give you er..that is, do they become disagreeable on that rare occassion when the IRS decides mid-year to increase the rate? Or do you also make an exception and increase the rate?
  • We recently changed our mileage reimbursement procedure to try to eliminate some of the piddly $1-$2 reimbursement requests we were getting, and to eliminate mileage payments to employees who were working at a different branch to get a new job or promotion.

    To accomplish the first goal, we restricted claims to situations in which the difference in mileage between the 'normal' drive and the 'temporary' drive is greater than 25%.

    To accomplish the second goal, we differentiated between situations in which an employee is helping out in an emergency, vs. an employee doing what we've agreed in advance will be part of the employment process. Some of the specific wording I used: [COLOR=darkgreen]"Temporary reassignment due to initial training, management development opportunities, or other reasons that provide substantial growth or job security to the employee will not qualify for mileage reimbursement."[/COLOR]
  • [quote=NaeNae55;718970]Joannie: do your employees give you er..that is, do they become disagreeable on that rare occassion when the IRS decides mid-year to increase the rate? Or do you also make an exception and increase the rate?[/quote]

    We don't make exceptions. We state in our policy and under the expense reimbursement section in our handbook that the Jan 1 rate applies all year.

    Disagreeable? Do any employees ever become disagreeable when they want a policy exception and don't get it?::angryface::
  • Just out of curiosity - what would you do if the IRS dropped the rate mid-year? If you don't adjust then you have to record the difference as taxable income, which would be a serious pain in the er..fanny. Of course, that situation is extremely unlikely, but it IS possible.

    Our employees are NEVER disagreeable, and no one has been in my office recently with their voice raised about one of our policies...AND I know of some prime land for sale at a bargain price in Florida. :)
  • With drivers we have so many different bonus programs, one more entry into taxable income wouldn't be noticed.
  • Guess we are just a bunch of ol' tight wads... we have never paid the maximum amount allowed by the IRS. We reduced our travel reimbursement to $0.40 per mile effective January 1, 2010. A valid driver’s license issued within the United States and personal automobile insurance are required for expenses to be reimbursed. This represents reimbursement for all vehicle related expenses including but not limited to gasoline, wear and tear, and personal auto insurance.
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