Yes. Labor Code § 2802(a) requires an employer to pay business related expenses their employees incur in performing their duties, such as driving for the benefit of the employer.

How can my employer pay me for my mileage? The California Supreme Court has recognized that your employer can reimburse you in at least these three ways;

First, by the IRS standard mileage rate. The Department of Labor Standards Enforcement (DLSE) recognizes that the mileage reimbursement used by the IRS is reasonable. If the employee believes they are entitled to more than the IRS mileage reimbursement, they are permitted to challenge the amount to prove their actual costs are more. If the employer want to pay less than the IRS rate, the employer has the burden of proving that the employees cost for operating a vehicle for work is actually less.

Second, by the actual expense method. The actual cost of mileage is calculated by adding the cost of fuel, depreciation, insurance, maintenance and all other operating costs. If the employer believes the actual cost is less that the IRS standard mileage rate, they can pay less if they can prove that.

Third, with a lump sum, such as a car allowance. This sum must provide full reimbursement for the actual costs incurred. The lump sum amount is subject to challenge by the employee. The employee can do so by comparing the lump sum to the actual expense method or the mileage reimbursement method. If the lump sum is not enough, the employer must make up the difference.

An employer can compensate their employee for their mileage expense with increased wages or commissions as long as they can prove, with an itemization, that the compensation is sufficient to cover the actual cost. If commission compensation, which tends to be variable, falls to a level where the actual driving expenses are not covered, the employer must make up the difference.

The Ninth Circuit Court of Appeals has ruled that an “unlicensed junior accountant” may not be exempt from wage and hour law under the professional or administrative exemptions. The Court also ruled, in revoking the trial court’s summary judgment for the accountant, that the Defendant in this case had enough evidence for a jury to decide if the accountant was an exempt employee. Campbell v. PricewaterhouseCoopers LLP (2011) 642 F.3d 820.

On February 7, 2011, a Court of Appeals in Los Angeles ruled that the “explicit mutual wage agreement” doctrine is available in California wage & hour cases notwithstanding the significant changes made by the Legislature to the Labor Code more than ten years ago. (Arechiga v. Dolores Press, Inc., Court of Appeals, Second Appellate District, Division Eight, Case No. BC380124) Under an “explicit mutual wage agreement,” an employer can avoid the payment of the overtime hours worked by a non-exempt employee if the fixed salary pays the employee at least 1 1/2 the employee’s basic hourly rate for all overtime hours.

To prove the existence of an explicit fixed wage agreement, the employee must have been told: 1) The days he or she would work; 2) The number of hours he or she would work; 3) that he or she would be paid a guaranteed salary of a specific amount; 4) The basic hourly salary rate upon which his or her salary is based; 5) That the salary will cover both his or her regular and overtime hours; and 6) The agreement must be reached before the work was performed by the employee.

This decision will most likely be appealed before the California Supreme Court. Until such time as the Supreme Courts defines the availability of the explicit mutual wage agreement doctrine, employers should exercise caution and continue to pay overtime based on the effective rate of the employee. In the case of non-exempt salaried employees, the Labor Code states that the “regular hourly rate shall be 1/40th of the employees’ weekly salary.”