Author: ADP Admin/Tuesday, November 4, 2025/Categories: Compliance Corner , State Compliance Update, California
Impacted Employers:Employers with employees who use their own vehicles on the job
Effective Date:Jan. 1, 2026
Summary:California has enacted legislation that clarifies that the duty of an employer to reimburse their employees for business expenses also applies to the use of a vehicle owned by an employee and used by that employee in the discharge of their duties.
Next Steps:Review reimbursement policies and practices to ensure compliance with the clarified law.
Under existing law, employers must indemnify (pay upfront/reimburse) their employees for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of their duties, or because they followed the directions of the employer.
Effective Jan. 1, 2026, Senate Bill 809 clarifies that the employer’s duty to indemnify their employees for business expenses also applies to the use of a vehicle owned by an employee and used by that employee in the discharge of their duties.
With respect to construction trucking, a commercial motor vehicle driver who owns the truck, tractor, trailer, or other commercial vehicle that they use in the discharge of their duties as an employee working for an employer would be entitled to reimbursement for the use, upkeep, and depreciation of that truck, tractor, trailer, or other commercial vehicle.
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