In Otsuka v. Polo Ralph Lauren Corp., a federal district court in Northern California recently approved a $4 million class action settlement for unpaid wages. Plaintiffs alleged that, as part of the retailer’s loss prevention program, they were required to submit to inspections of their personal bags and belongings before exiting the store. However, the inspections occurred after the employees had already clocked out. The settlement will compensate as many as 6,700 class members for the off-the-clock time waiting for and submitting to these bag inspections.    Employers are cautioned against retaining control over employees after the employee has clocked out.  Retaining sufficient control over what the employee does after clocking out, may amount to nothing short of forcing the employee to work off the clock, thereby entitling the employees to back pay, penalties and attorneys fees.

The U.S. Department of Labor (“DOL”) has published an Administrator’s Interpretation to address the question of whether an employee is entitled to leave under the Family Medical Leave Act (“FMLA”) to care for a child they are not biologically related to.  The FMLA provides that an eligible employee can take up to 12 weeks of unpaid leave for, among other things, the birth and care of the employee’s own newborn child, for placement of a son or daughter with the employee for adoption or foster care, and to care for a son or daughter with a serious health condition.  Under the FMLA, employees who have no biological or legal relationship with a child may still be considered to stand in “loco parentis” to the child and be entitled to leave to care for the child.  Such a relationship can be demonstrated either by providing day-to-day care for the child, or financial support to the child. The DOL memo also makes it clear that same sex partners can establish the requisite in loco parentis relationship, providing in part that “where an employee provides day-to-day care for his or her unmarried partner’s child (with whom there is no legal or biological relationship) but does not financially support the child, the employee could be considered to stand in loco parentis to the child and therefore be entitled to FMLA leave to care for the child if the child had a serious health condition.”  The Interpretation further states that the same applies for “an employee who will share equally in the raising of a child with the child’s biological parent” and “an employee who will share equally in the raising of an adopted child with a same sex partner, [but] does not have a legal relationship with the child.”  The DOL also notes that “the fact that a child has a biological parent in the home, or has both a mother and a father, does not prevent a finding that the child is the ’son or daughter’ of an employee who lacks a biological or legal relationship with the child for purposes of taking FMLA leave.”

Employers need to be aware that the FMLA and California child care leave laws are not  necessarily limited to traditional definitions of family and parentage.  When faced with a request for child care leave, employers need to make an individualized fact-based determination regarding the relationship between the employee and the child.

In this post by Sarah Needleman of the Wall Street Journal, she points out a new tax credit that may be available to small business owners who pay for health insurance for their employees:

Uncle Sam wants small-business owners to take notice of a new health-care tax credit — one of the first provisions of the recently enacted health-reform law to go into effect.

Last week, the Internal Revenue Service announced that it’s sending postcards to more than four million small businesses urging them to check if they qualify for the tax break. It’s being offered in two phases, with the first worth up to 35% of qualifying businesses’ premium health-care costs for tax years 2010 through 2013. The rate increases to 50% in 2014. The maximum length of potential coverage for qualifying employers is six taxable years: four years under the first phase and two years under the second.

In general, to be eligible for the tax credit, businesses must cover at least 50% of the cost of health-care coverage for some of their workers, employ fewer than the equivalent of 25 full-time workers and pay average annual wages below $50,000. The IRS says the tax break is designed to encourage smaller businesses – which are not mandated by 2014 to provide health care, unlike companies with more than 50 employees – to offer health coverage to their low- and moderate-income workers.

Tammy Rostov, owner of Rostov’s Coffee & Tea in Richmond, Va., says she received the IRS’s postcard and expects her small retail business to be eligible for the credit. She offers health coverage to her five full-time employees and pays 100% of the premium, an amount that she says has increased by more than 200% over the past six years. She describes the tax credit as a welcome relief. “It’s a step in the right direction,” she says.

But other qualifying business owners are less enthusiastic, arguing that the tax break won’t make a significant impact on their bottom lines.

Pascal Helou, owner of Globotron LLC, a technology-consulting company in New York, says affording health insurance for his three employees is a non-issue given that he’s struggling these days just to stay in business. Since 2007, he says sales have declined 30% every year and his firm now has four clients, down from 15.

“For my business, this type of tax credit will not make a difference,” says Mr. Helou, adding that he has yet to receive the IRS’s postcard about it. “The real issue is the amount of business we’re getting. Nobody’s willing to spend money” on technology-consulting services.

Meanwhile, there are also some entrepreneurs who don’t believe the government should provide financial incentives for small businesses to offer health coverage to workers in the first place.

Jim Fab, owner of Fab Electric Inc., an electrical contractor business in Gaithersburg, Md., falls into this camp. Providing health insurance and other benefits to his 18 employees, he says, is “hopefully what separates me from the electrical contractor that doesn’t.”

Some small businesses appear to be left without any government aide under the new piece of health-reform legislation. These include organizations with between 25 and 50 employees and ones with less than 25 employees but payrolls that average $50,000 or more.

Tracy Betts, says her Springfield, Va., Web-design business, Balance Technology Group Inc., doesn’t qualify for the credit. While she employs the equivalent of eight full-time workers, their salaries’ average $71,000. “For me, it’s all about the programmers, and I can’t hire anyone for less than $90,000 (in annual pay),” she says.

Ms. Betts says a year and half ago she told her staff she could only afford to offer them either health-care coverage or a retirement-savings plan with a matching contribution from the company. All but one chose the latter benefit, she says.

This Smart Money article by Diana Ransom posted at the Wall Street Journal web page discusses several future growth industries.

Much has been said about the Obama administration pushing through new regulations on everything from health-care companies to banks — not to mention the impact these changes will have on the overall economy. But less attention has been paid to the way the new regulations will play out for entrepreneurs: Will stepped-up regulation stifle or stimulate growth? SmartMoney spoke with business owners, venture capitalists and analysts for a snapshot of six industries poised for growth.

Telecommunications

Even though shares of telecom giant Verizon Communications and its Finnish counterpart Nokia fell last week after reporting lackluster first-quarter results, there may be wind in their sails yet, says Drew Clark, director of strategy for IBM’s Venture Capital Group in San Mateo, Calif. One boost may come from the president’s National Broadband Plan, a program that aims to increase access to mobile broadband and support a nationwide public safety wireless broadband network. These firms, along with others, will likely benefit, says Clark. Per the Obama administration’s 2009 stimulus package, the government plans to spend $7.2 billion on the nation’s broadband projects.

Hosted Services

Perhaps the greatest beneficiaries of the president’s broadband agenda are the small companies that will have better access to faster web channels. FlexiSphere, a Hawthorne, N.Y., firm, offers financial services firms so-called cloud computing — technology that allows firms to share the server of a larger company via the Internet. As the nation’s infrastructure improves, so will access to the company’s products and services, says Tom Saleh, the company’s founder and CEO. “Cloud computing is all about better, faster, cheaper,” he says, adding that this is just a first step. “Cloud computing is doing for computing what the Internet did for communications,” Saleh says.

Information Technology

So far, the government hasn’t suggested the need to further regulate the information technology field, giving these firms a distinct advantage. That’s because the uncertainty surrounding regulatory reforms can both stymie a small company’s ability to make decisions and trigger a pullback in investment. In the first quarter of 2010, the IT industry raised $1.5 billion for 192 deals — the most of any other industry tracked by Dow Jones VentureSource, a research firm owned by News Corp., which also publishes SmartMoney.com and The Wall Street Journal.

Further, there’s a lot of pent-up demand for technology, says Karl Mills, the president and chief investment officer for Jurika Mills & Keifer, an independent investment advisory firm in Oakland, Calif. “Old inventory of technology gets written off quick when it becomes obsolete. However, during the downturn, many consumers and businesses put off buying new equipment,” he says. Plus, many of the larger companies in this arena, which often scoop up their smaller brethren, are well capitalized. “Microsoft could write a check and bail out Greece,” Mills says.

Media, Content Production

With that enhanced infrastructure, other beneficiaries include media companies and other content providers, which have struggled in recent years thanks to a precipitous drop in advertising revenues, says Sal Tirabassi, a partner at M/C Venture Partners in Boston. Between downloading movies and watching TV online at home or on a web-enabled mobile device, consumers’ appetites for content will likely expand, as will advertising opportunities. “Advertisers are increasing their budgets slightly again,” he says. “There will be a bit of a rebound there.”

Health Care

Thanks to federal and state stimulus dollars, the health-care infrastructure in the U.S. is about to get a triple bypass. Not only does the government plan to plow $20 billion into computerizing health records, the angel investment community has taken an interest in the sector. In 2009, health-care services, medical devices and equipment attracted 17% of total angel investment dollars, or nearly $3 billion, according to the Center for Venture Research at the University of New Hampshire. “We’re seeing a lot of companies come through here with technology solutions for innovating medical records,” says Michelle Murcia, the chief financial officer of TechColumbus, a business incubator and venture firm in Columbus, Ohio. “Health care IT is a huge growth area.”

Clean Energy

The U.S. Energy Information Administration projects that global energy consumption will jump 33% between 2010 and 2030. This added demand, combined with a mix of venture-capital investment and $43 billion in federal stimulus spending bodes well for businesses that make everything from solar panels and wind turbines to electricity grids and batteries, says Clark from IBM.

In addition, the government recently sweetened the tax incentives and subsidies for homeowners and businesses to install solar and other forms of energy-saving equipment. “Despite the fact that we’ve been in one of the worst recessions in decades, business in the industry has grown,” says David Kaltsas, president of SunWize Technologies’ systems group, a solar-panel installation and sales firm in Kingston, N.Y., which recently launched an installation franchise program. “Last year was tough, but we’ve since grown double-digits in our direct-installation business.”

As discussed in my earlier posts  here, congress has repeatedly extended the benefits to employees under COBRA. And now, for the third ime, the COBRA premium subsidy program has been extended, this time through May 31, 2010, under the Continuing Extension Act of 2010 (Act). The key provisions of the Act include:

• The extension of the eligibility period for the COBRA subsidy through May 31, 2010.
• A new special election period and related notice requirement for individuals who experience a qualifying event that is related to a termination of employment on or after April 1, 2010, and before April 15, 2010.

The excerpts below are from an article posted by the law firm of Drinker Biddle, a large national law firm.

Special Election Period

A health plan must extend a special COBRA election period to an individual who experienced an involuntary termination of employment on or after April 1, 2010, and prior to April 15, 2010, and who would be an “assistance eligible individual” (AEI) but who does not have a COBRA election in effect on April 15, 2010. The special election period runs from April 15, 2010, through the date 60 days after the Notice of Special Election Period is provided to that individual.

Note about effective date of COBRA subsidy. Although not specifically addressed in the Act, due to the short, 15-day gap between the expiration of the COBRA subsidy on March 31, 2010, and enactment of the Act, we believe that an individual’s COBRA subsidy becomes effective as of the first day of COBRA coverage if he or she elects coverage during the special election period.

Notice of Special Election Period

In the case of any individual who experienced a qualifying event related to a termination of employment on or after April 1, 2010, and prior to April 15, 2010, a plan administrator must provide the general COBRA notice, including a description of the availability of premium reduction in the case of a qualifying event that is an involuntary termination of employment, within 60 days of enactment of the Act (i.e., by June 14, 2010). If the plan administrator has already distributed the general COBRA notice to such individuals, then the plan administrator may simply supplement it with an additional notice describing the extension of the availability of premium reduction with respect to involuntary terminations through May 31, 2010, and the special election period.

Note about the notice requirement. The Act is not clear on whether this notice applies only to AEIs, or to any individual who has a qualifying event related to a termination of employment, whether voluntary or involuntary, during the period April 1, 2010, through April 14, 2010. The more conservative approach is for a plan administrator to provide the special election notice to any individual who experienced a qualifying event related to a termination of employment on or after April 1, 2010, and prior to April 15, 2010, in order to notify all individuals who may potentially be eligible for the COBRA subsidy, including those who an employer may have incorrectly classified as voluntarily terminated.

A Reminder – Expansion of Assistance Eligible Individuals

Under ARRA, only individuals who experienced a qualifying event that was an employee’s involuntary termination of employment could become AEIs and take advantage of the COBRA premium subsidy. The Temporary Extension Act of 2010 expanded the premium subsidy to include as a qualifying event for purposes of the subsidy, a reduction of hours that occurred at any time on or after September 1, 2008, and is followed by an involuntary termination of employment that occurs on or after March 2, 2010 (and before June 1, 2010). Individuals who experience a qualifying event that falls under this expanded definition and are otherwise eligible AEIs (Reduced Hours AEIs) will be eligible for the COBRA subsidy beginning with the first day of the first period of coverage for which the individual is a Reduced Hours AEI. The Reduced Hours AEI’s maximum continuation coverage period is determined as if the individual had elected COBRA when initially eligible due to the reduction of hours.

Action Items

Plan sponsors and administrators should consider the following immediate action items:

• Notices. Plan administrators should update their COBRA notices and other plan communications to include the extension of the eligibility period to May 31, 2010.
• Assess Prior Terminations. Identify covered employees (and their qualified beneficiaries) who became eligible for COBRA on or after April 1, 2010, and before April 15, 2010, as well as their COBRA elections. Provide an updated COBRA notice to these individuals that includes a description of the extended eligibility period and the special election period. Identify those employees and beneficiaries in the group whose qualifying event is the employee’s involuntary termination of employment and who are eligible for the COBRA subsidy.
• Continue to Monitor Reduced Hours AEIs. Plan administrators should continue to identify any Reduced Hours AEIs, and provide a new notice to them upon involuntary termination. An individual in this group may be eligible for the special election period if, upon a reduction in hours the individual did not elect, or elected and later discontinued, COBRA.
• Stay Tuned. Two separate bills in Congress propose to further extend the COBRA subsidy eligibility period through June 30, 2010, or year end.

COBRA Update, Again…

Justin Scheck of the Wall St. Journal writes that “for years, Dell Inc. has relied on sales to small businesses for a big chunk of its revenue. It sells more personal computers to small companies than any tech supplier. Now, it is offering more credit to spur small business purchases.”

He goes on to note that “The financing strategy is showing promise. Its small-and-medium-business division posted a 10% gain in revenue in the company’s fiscal fourth quarter ended Jan. 29 from the same period last year, versus an 11% gain for the company as a whole. Operating-profit rose 17% from the same quarter last year to $282 million, surpassing the $281 million in operating profit from Dell’s large-business unit, which posted an 8.4% rise from last year.”

You can read the entire article here, and check out Dell’s page to see if anything interests you! A market snapshot on Dell here.

President Obama recently signed the Hiring Incentives to Restore Employment (HIRE) Act, containing more than $17 Billion in tax credits designed to stimulate employment. The Act also includes $20 Billion for highway and transit infrastructure programs as well. One of the most important provisions for businesses is a tax credit for hiring from the ranks of the unemployed.

Under the Act, when an employer hires a “qualified employee” the employer is excused from paying the normal Social Security match of 6.2% of the wages in 2010. What is a qualified employee you ask? A qualifying employee is one who

• is hired after Feb. 3, 2010 and before Jan. 1, 2011;
• is not hired to replace another employee;
• is not related to the employer;
• and certifies under penalty of perjury that he or she has not been employed for more than 40 hours during the 60-day period ending on the date that employment begins with the new employer.

This incentive can save the employer over $6,000 annually for each qualified employee that is hired. Under certain circumstances, the employer who hires a new employee, and retains their services for 52 weeks, may also be able to receive an additional tax credit available on the 2011 tax return equal to the lesser of $1,000 or 6.2% of the wages paid to an employee for those 52 weeks.

These tax incentives are meant to spur job creation, especially for small businesses who are undecided about whether to begin to ramp up expansion efforts in light of recent economic challenges.

Here is the press release from the Ways & Means Committee Chair describing this bill.

I discussed the importance of properly classifying those in your workplace (i.e., employee or independent contractor) in this older post.

Matthew Nelson of Dinsmore & Shohl writes here that UPS just entered into a $12.8 million settlement in a case dealing with the improper classification of their northern California drivers. He writes that “[t]he drivers claimed they were wrongfully classified as independent contractors rather than regular UPS employees, and as a result, were denied the benefits and protections of, among other things, the Fair Labor Standards Act (“FLSA”). Particularly, the drivers focused on the FLSA’s minimum wage and overtime guarantees.”

The drivers alleged that UPS controlled almost every aspect of the working relationship; including, delivery times for packages, that UPS dictated the drivers’ dispatches, set the prices, and even controlled what the drivers wore. Essentially, the drivers claimed they were such an integral part of UPS’s business, that they could not be said to have any separate or distinct business of their own. The court allowed the case to proceed as a class action, and the group eventually included roughly 2,400 UPS delivery drivers. Mr. Nelson also notes that “UPS denied the allegations, but eventually agreed to settle the case for $12.8 million (the settlement received provisional approval, but must still receive final approval from the court).”

If you are an employer utilizing independent contractors in your business, make sure that the classification is correct and that you aren’t simply postponing liabilities to a later point time.

You must properly classify those in your workplace (employee v. independent contractors)

This month, the EEOC and Sears, Roebuck & Co. entered into a court approved settlement agreement in the amount of $6,200,000.00 entitling the 235 impacted employees to over $26,000 each.  The distribution is being carried out pursuant to the terms of a consent decree approved by Federal District Judge Wayne Anderson on September 29, 2009. You can read the EEOC’s press release here.

In its lawsuit against Sears, the EEOC had alleged that Sears maintained an inflexible workers’ compensation leave exhaustion policy and terminated employees instead of providing them with reasonable accommodations for their disabilities, in violation of the ADA.

This large settlement reminds employers that if employees are out on some form of statutory leave, like the workers’ compensation leave at issue in the Sears matter, and the employee exhausts the leave but is still experiencing a medical condition that qualifies under the ADA or California’s Fair Employment and Housing Act (FEHA), the employer must engage in the “interactive process” to determine if a reasonable accommodation (including a possible extension of the employee’s leave) is available and can be provided to the employee without creating an undue hardship on the employer.  Otherwise, strict application of leave policies that result in the termination of an employee who fails to return to work at the exhaustion of such leave may result in significant liability for the employer.

I saw this guest post by Tim Flood (assistant professor of Management and Corporate Communications at the University of North Carolina’s Kenan-Flagler Business School ) posted at the Wall St. Journal regarding the 10 most common mistakes management makes in connection with emails, and I thought I would pass it along, enjoy!

Many of us think we use email well. We don’t.

Too many of us rush, causing confusion and requiring more time to clarify misunderstandings later. We miss chances to build relationships, motivate others, close deals and convey important information.

Avoid the following ten mistakes.

1. Using vague subject lines. “Meeting,” “Update,” or “Question” provide no value as subject lines.

Maximize the subject line’s message. PDA users will get the message quickly; everyone will appreciate the clear summary. You can communicate plenty in a five to 10 word subject line: “Your Action Items and Minutes from Last Week’s Meeting” or “Sam: See You at 10:00 Tuesday with Report In-Hand?”

2. Burying the news. Convey the important points first: put dates, deadlines and deliverables in the first one to three lines of the message (if not also in the subject line). PDA limitations, time pressures, cultural distinctions and value judgments keep many readers from reading further.

3. Hiding Behind the “BCC” field. At best, the ‘blind copy’ field is sneaky and risky. At worst, it’s deceitful or unethical. Plus, blind recipients sometimes hit “reply all,” revealing the deception. Instead, post the initial message and BCC no one. Then forward your sent message to others with a brief explanation.

4. Failing to clean up the mess of earlier replies/forwards. Few readers will wade through strings of previous messages.

• State your position clearly, even if context follows below in the email string. “Yes” helps less than “Yes, you can have the extra funding to hire 5 temporary workers.”
• Summarize the discussion to date: “See below: R&D is looking for more time but Sales risks losing customers if we don’t act now.”
• Force focus when necessary: “Let’s focus on cost now and revisit the morale and equity issues at our staff meeting next week.”

• Change subject lines cautiously. Tighter, more relevant subject lines work best, but even one letter’s difference upsets inbox sorting mechanisms.
• Cut extraneous or repetitive information.

5. Ignoring grammar and mechanics. PDAs have granted us certain sloppy flexibility, which means you’ll impress readers even more when you write precisely.

• Follow standard punctuation, capitalization and spelling rules.
• Think carefully about the tone different punctuation conveys. “Dear Betty,” is standard, neutral; “Dear Betty:” is professional, perhaps distant; “Dear Betty!” is personable, perhaps excessively so; “Dear Betty.” prefaces bad news.
• Avoid over-stylizing with high-priority marks, disorienting color or complex backgrounds.

• Avoid all-caps and excessives (like “!!!!” or other strings of punctuation).

6. Avoiding necessarily long emails. Longer messages sometimes work best; they can help avoid attachments’ hassle and security fuss. Don’t fear long emails but outline your structure and motivate reading up top.

• Provide a ‘mapping statement’ to allow readers to skim for key information: “I’ve included information, below, on the background, costs, implementation schedule and possible problems.”
• Emphasize the specific response you seek: “Please let me know, before Monday, how this project will impact your team.”
• Indicate an attachment’s presence and value: “I’ve attached slides that I need you to review before our meeting; those slides identify total costs and break down the budget.

7. Mashing everything together into bulky, imposing, inaccessible paragraphs. Length does not discourage reading; bulk does.

• Keep your paragraphs short, ideally no more than three to five lines of type.
• Open each paragraph with a bottom-line sentence.
• Use section headings (in all-caps) to facilitate skimming.

• Include blank lines between paragraphs and section headings.
• Avoid italics, boldface and other typeface changes which do not reliably carry across email systems.

8. Neglecting the human beings at the other end. Email travels between actual people, even though we don’t see or hear each other directly.

• Praise, precisely. “Great job” takes little time and space but can work wonders. Quickly wishing someone a good weekend, at the end of an email, might perk someone up without cluttering your message.
• Avoid conveying blame or delivering negative feedback over email. Talk to the person instead.
• Avoid sarcasm, caustic wit, off-color humor and potentially inappropriate remarks —all of these elements tend to confuse, disorient or fall flat over email.

• Consider using emoticons and exclamations (“!” but also “ha, ha” or “just kidding”) when they convey useful emotional context.

• Adjust your style to suit your audience. For people who don’t know you, a terse style might seem rude; a wordy style might seem unfocused.

9. Thinking email works best. Email is not always the best way to communicate.

• Need a quick answer from someone nearby? Stop by for a visit.
• Want a reply to several unanswered emails? Pick up the phone.
• Looking for more gravitas? Mail a letter.

• Need to explain a complex or sensitive situation? Arrange a meeting.

10. Forgetting that email lasts forever. Most of us read, send and discard emails at lightning speeds. But don’t forget that emails remain on a server somewhere as easy-to-forward proof of any error, offense or obfuscation we made.

Top 10 email mistakes made by management

As many of you know, when an employee is terminated the employee may be eligible to continue their participation in the company sponsored health plan through what is often referred to as COBRA.  COBRA is a federal law that allows workers who leave their jobs to continue their former employer’s health insurance coverage for up to 18 months. Ordinarily, though, individuals must pay the entire premium, plus an administrative fee, making COBRA unaffordable for many unemployed workers. The economic stimulus package enacted in February 2009 subsidized 65% of COBRA premiums for workers laid off between September 1, 2008, and December 31, 2009. This legislation required employers to pay the 65% subsidy and then reclaim those dollars through a quarterly tax credit.

Recently, however, the government signed the Defense Department’s 2010 appropriations bill (“2010 DOD Act”) that will allow laid-off workers to receive subsidized COBRA premiums for up to 15 months, which previously expired after 9 months.

The Department of Labor’s Employee Benefits Security Administration (EBSA) has released a fact sheet explaining how the 2010 DOD Act extends the COBRA subsidy enacted during the earlier economic stimulus package. In general, the 2010 DOD Act extended the COBRA premium reduction eligibility period for two months, through February 28, 2010 and increased the maximum period for receiving the subsidy from 9 to 15 months.

Also, the fact sheet reviews the eligibility requirements for the subsidy, the new period of coverage, and notice requirements that plan administrators must provide. The fact sheet explains that plan administrators are now required to provide notice about the changes made to the COBRA premium subsidy provisions to individuals who have already been provided a COBRA election notice, unless the election notice included the updated premium reduction information. The notices must be given to eligible individuals by February 17, 2010. Individuals who have been terminated on or after October 31, 2009 and will lose health coverage must be provided this notice “within the normal timeframes for providing continuation coverage notices.” Those who had reached the end of the reduced premium period before the legislation extended it to 15 months must be provided this notice within 60 days of the last day they were eligible to receive COBRA premium assistance under the old rules.

California Labor Code §2802 requires an employer to indemnify (reimburse) its employees for all necessary expenses or losses incurred in the course of his or her duties. This includes an employee’s expenses when an employee uses their own vehicle for business purposes. Many employers reimburse their employees on a per mileage basis for use of their own vehicle during business errands.  The reimbursement is used to cover the costs (fuel, insurance, etc..) associated with the use of the vehicle for non-personal use.  However, many employers are not sure what mileage reimbursement rate they should use in making the reimbursement calculation.

While there is no specific reimbursement rate provided for in the Labor Code, there is guidance on the matter in both the Opinion Letters issued by the California Department of Labor Standards Enforcement (DLSE) and Labor Code Section 2802.

The DLSE has stated in its manual and opinion letters that it in the absence of other “evidence to the contrary” it will consider the use of the IRS mileage allowance rate as satisfying the requirement that the employer reimburse the expense’s incurred in use of an employee’s car. Businesses using the IRS mileage rate for calculating reimbursements should therefore be safe from under reimbursing their employees and violating Labor Code Section 2802.

On December 23, 2009, the Internal Revenue Service (“IRS”) issued the mileage rates used to calculate the deductible costs of operating an automobile for business purposes in 2010. Beginning on January 1, 2010, the mileage rates for the use of a car (also vans, pickups or panel trucks) will be $.50 cents per mile for business miles driven.

Failing to reimburse your employees at the proper rate subjects the business to a potential lawsuit, which could seek damages for the amount not properly reimbursed, interest from the date on which the employee incurred the necessary expenditure or loss ,and the employee may also seek all reasonable costs (including attorney’s fees incurred by the employee enforcing the rights granted by Labor Code §2802).

Double check the rates you are using when reimbursing employees for use of their personal vehicle for business purposes.