Fact Check: Mileage and Expense Reimbursement Laws by State (2026)

The FLSA contains no positive expense-reimbursement requirement; the only federal protection is the §531.35 "free and clear" kickback rule applied to minimum-wage and overtime floors

29 CFR §531.35 verbatim text quoted: "Whether in cash or in facilities, 'wages' cannot be considered to have been paid by the employer and received by the employee unless they are paid finally and unconditionally or 'free and clear.' The wage requirements of the Act will not be met where the employee 'kicks-back' directly or indirectly to the employer or to another person for the employer's benefit the whole or part of the wage delivered to the employee."

§531.35 tool-of-trade example: "If it is a requirement of the employer that the employee must provide tools of the trade which will be used in or are specifically required for the performance of the employer's particular work, there would be a violation of the Act in any workweek when the cost of such tools purchased by the employee cuts into the minimum or overtime wages required to be paid under the Act."

29 CFR §531.32 identifies employer-benefit items that are not "facilities" — including safety equipment, employer-building taxes and insurance, company police protection, required uniform rental, and medical services

The charitable rate is fixed by statute at 14¢/mile under 26 USC §170(i) and has not changed since 1998

26 CFR §1.274-5 requires three substantiation elements for each business-mile trip: amount (business miles), time and place (date and destination), business purpose

26 CFR §1.62-2 establishes accountable-plan treatment with three prongs: business connection, substantiation, return of excess

IRC §67(g) was added by the Tax Cuts and Jobs Act of 2017 to suspend miscellaneous itemized deductions through 2025; the One Big Beautiful Bill Act (2025) made the suspension permanent

The educator-expense deduction carve-out at IRC §62(a)(2)(D) survives the §67(g) suspension

Rev. Proc. 2019-46 governs FAVR (Fixed-and-Variable-Rate) plans; the 2026 maximum standard automobile cost under a FAVR plan is $61,700

California Labor Code §2802(a) verbatim: "An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful."

California Labor Code §2802(b) verbatim: "All awards made by a court or by the Division of Labor Standards Enforcement for reimbursement of necessary expenditures under this section shall carry interest at the same rate as judgments in civil actions."

The California civil judgment interest rate under CCP §685.010 is 10% per year

California Labor Code §2802(c) verbatim: "For purposes of this section, the term 'necessary expenditures or losses' shall include all reasonable costs, including, but not limited to, attorney's fees incurred by the employee enforcing the rights granted by this section."

§2802 statute of limitations is 3 years under California Code of Civil Procedure §338(a); 4 years when repackaged as a UCL claim under Bus. & Prof. Code §17208

California Labor Code §1174 establishes the employer recordkeeping duty that supports burden-shifting on unreimbursed-expense claims

820 ILCS 115/9.5 became effective January 1, 2019; enacted August 26, 2018 as an amendment to the Illinois Wage Payment and Collection Act

820 ILCS 115/9.5 statutory definition of "necessary expenditures" — "all reasonable expenditures or losses required of the employee in the discharge of employment duties and that inure to the primary benefit of the employer"

820 ILCS 115/9.5 imposes a 30-day submission window for expense claims, with reasonable employer caps permitted by written policy

Enforcement of §9.5 runs through 820 ILCS 115/14, providing attorney's fees and costs to prevailing employees under the IWPCA

454 CMR 27.04(4)(b) and (d) require reimbursement of travel-related transportation expenses for off-site work and for travel during the workday

Enforcement runs through MGL c.149 §148 (Wage Act) with mandatory treble damages plus attorney's fees and costs under MGL c.149 §150

Montana Code Annotated §39-2-701 — textually identical structure to California §2802(a) for indemnification "for all that the employee necessarily expends or loses in direct consequence of the discharge of the employee's duties"

North Dakota Century Code §34-02-01 — same Field Code indemnification language

South Dakota Codified Laws §60-2-1 — same Field Code indemnification language

New Hampshire RSA 275:57 — 30-day reimbursement of employment expenses requested by the employer "within 30 days of the presentation by the employee of proof of payment"

Willful violation of RSA 275:57 carries up to a $2,500 civil penalty per violation under RSA 275:51, plus interest

District of Columbia 7 DCMR §910 (Tools) — "The employer shall pay the cost of purchasing and maintaining any tools required of the employee in the performance of the business of the employer"

District of Columbia 7 DCMR §908 (Uniforms / Protective Clothing) — employer must pay for purchase, maintenance, and cleaning of required uniforms or protective clothing

Iowa Code §91A.3(6) requires reimbursement of authorized expenses within 30 days of submission, with written justification of refusal within the same period

Minnesota Statutes §177.24 bars employers from deducting from wages for required uniforms/equipment/supplies/travel if the deduction would reduce wages below the minimum wage; caps total uniform/equipment deduction at $50; requires full refund at termination

New York Labor Law §198-c — "wage supplements" include reimbursement for expenses if subject to underlying agreement; willful failure to pay within 30 days is a misdemeanor; exemption for executive/administrative/professional employees earning over $1,300/week

Pennsylvania has no expense-reimbursement statute; agreed-upon reimbursements are "fringe benefits" under the Wage Payment and Collection Law (43 P.S. §260.1 et seq.) with a 60-day payment requirement

Seattle SMC 14.20 (Wage Theft Ordinance, effective April 1, 2015) defines "compensation owed" to include reimbursable expenses under contract or applicable law; gross misdemeanor; treble damages for willful violations

Seattle SMC 14.34 (Independent Contractor Protections Ordinance, effective September 1, 2022) requires pre-contract disclosure of "typical expenses to be reimbursed" and itemized payment statements showing "expenses reimbursed"

Federal minimum wage is $7.25/hr

2026 IRS standard mileage rates — 72.5¢/mile business (+2.5¢ from 2025); 20.5¢/mile medical and moving (active-duty military) (−0.5¢ from 2025); 14¢/mile charitable (no change)

2026 depreciation portion of the business rate is 35¢/mile (up 2¢ from 2025); 2026 FAVR maximum standard automobile cost is $61,700 (up $500 from 2025)

2025 rates — 70¢ business; 21¢ medical/moving; 14¢ charitable (Notice 2025-5)

2024 rates — 67¢ business; 21¢ medical/moving; 14¢ charitable (Notice 2024-08)

DOL Wage and Hour Division Field Operations Handbook Chapter 30 covers deductions, kickbacks, and tools-of-trade; FOH 30c11 addresses vehicle expenses

DOL opinion letter FLSA2008-15 (Sept. 11, 2008) reaffirmed the position that a "reasonable approximation" of actual vehicle expense — often pegged to the IRS standard mileage rate — satisfies the kickback rule for minimum-wage purposes

The IRS standard mileage rate is a safe-harbor tax treatment, not a federal reimbursement requirement

§2802 interest accrues from the date the expense was incurred — not from the date of judgment

Practitioner compliance pattern for California cell-phone reimbursement: a fixed monthly stipend (commonly $30–$100) or a percentage of the bill negotiated case-by-case; no court has fixed a percentage

Massachusetts is narrower than California — 454 CMR 27.04(4) covers transportation expenses for off-site work, not a general "necessary expenditures" indemnity

Montana, North Dakota, and South Dakota statutes trace to David Dudley Field's 1895 Civil Code adoption — shared parentage with California §2802

Under Cochran, "required" use is interpreted broadly — an employer that calls/texts on a personal number, sends work alerts via a personal phone app, or expects responsiveness without issuing a company device has "required" cell phone use under §2802

Practitioner compliance pattern for California remote-work expenses: $30–$75/month home-internet stipend; $500–$1,500 initial equipment stipend

Most EPLI policies exclude §2802 claims; remote-work settlements come out of operating budget, not insurance

The reimbursement rule follows the employee's work location, not the employer's headquarters or payroll office; a California-resident remote employee of an out-of-state employer triggers §2802 for the California-side work

IRS Notice 2026-10 issued December 29, 2025 as IR-2025-128

IRS Notice 2026-10 (IR-2025-128), December 29, 2025: 2026 business standard mileage rate at 72.5¢/mile, up 2.5¢ from 2025; medical and moving 20.5¢, down 0.5¢; charitable 14¢ (statutory)

The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, made permanent the IRC §67(g) suspension of miscellaneous itemized deductions originally enacted by the TCJA in 2017

Seattle SMC 14.34 (Independent Contractor Protections Ordinance) took effect September 1, 2022

As of May 2026, no pending federal legislation would create a federal expense-reimbursement duty; periodic proposals to amend the FLSA to include personal-vehicle reimbursement have not advanced

Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal. 4th 554 (Cal. 2007) held §2802 permits three reimbursement methods — actual expense, mileage rate, or lump-sum salary/commission enhancement

Cochran v. Schwan's Home Service, Inc., 228 Cal. App. 4th 1137 (Cal. Ct. App. 2014) held that §2802 requires reimbursement of a "reasonable percentage" of the personal cell phone bill regardless of plan type or marginal cost

Thai v. International Business Machines Corp., 93 Cal. App. 5th 364 (Cal. Ct. App. 2023) rejected IBM's "the government caused the expense" defense to §2802; reversed the trial court's judgment for IBM and remanded

Dynamex Operations West, Inc. v. Superior Court, 4 Cal. 5th 903 (Cal. 2018) established the ABC test that California codified at Lab. Code §2775 — independent-contractor reclassification reaches §2802 reimbursement when misclassified workers are reclassified as employees

Morillion v. Royal Packing Co., 22 Cal. 4th 575 (Cal. 2000) addressed compensable travel time under employer-controlled transportation; cited as the cross-reference for the travel-time/§2802 interaction in construction-trades reimbursement

Thai v. International Business Machines Corp., 93 Cal. App. 5th 364, decided July 11, 2023 by the California Court of Appeal (First District), reversing the trial court's judgment for IBM

Williams v. Amazon.com Services LLC, No. 3:22-cv-01892 (N.D. Cal.) — settled for $950,000 with final approval granted January 23, 2024 covering California Amazon corporate employees who worked remotely during COVID

50-state coverage — every state row identifies either an affirmative duty with statutory citation or "Federal floor only" with no state-specific duty

Ten jurisdictions have affirmative reimbursement duties: California, Illinois, Massachusetts, Montana, New Hampshire, North Dakota, South Dakota, Iowa, the District of Columbia, and the City of Seattle

Final approval of the $950,000 class settlement in Williams v. Amazon.com Services LLC, No. 3:22-cv-01892 (N.D. Cal.), granted January 23, 2024