New York does not have a standalone law requiring employers to reimburse employees for driving their personal vehicles for work. Even so, New York mileage reimbursement can still be legally required in three situations: when unreimbursed driving costs would drag an employee’s pay below minimum wage, when the employer promised reimbursement in a handbook, offer letter, or policy, or when a union contract or individual employment agreement requires it. Most employers that do reimburse use the IRS standard business mileage rate, which is 72.5 cents per mile for 2026.1Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile, Up 2.5 Cents
When New York Employers Must Reimburse
The absence of a specific mileage statute misleads some businesses into thinking they owe nothing. Three separate legal frameworks can create an obligation, and any one of them is enough.
The Minimum Wage Floor
Under both the federal Fair Labor Standards Act and New York’s wage laws, an employee’s take-home pay cannot fall below minimum wage after work-related expenses are counted. The U.S. Department of Labor treats the cost of using a personal vehicle for the employer’s benefit the same as a required uniform or tool: if the unreimbursed cost pulls the effective hourly rate below the minimum for any workweek, the employer has violated the law.2U.S. Department of Labor. WHD Opinion Letter FLSA2020-12
For 2026, New York’s minimum wage is $17.00 per hour in New York City, Long Island (Nassau and Suffolk Counties), and Westchester County, and $16.00 per hour in the rest of the state.3NY.gov. New York State’s Minimum Wage Because those rates are well above the federal $7.25, salaried and higher-paid hourly workers rarely trip this wire. Delivery drivers, home health aides, and other hourly workers close to the floor can, and often do.
Promised Reimbursement as a Wage Supplement
This is the angle employers most often miss. New York Labor Law Section 198-c defines “benefits or wage supplements” to expressly include reimbursement for expenses.4New York State Senate. New York Labor Law 198-C Once an employer promises mileage reimbursement in a handbook, offer letter, written policy, or employment agreement, that promise becomes enforceable in the same way vacation pay or health benefits are. A company whose handbook says “we reimburse mileage at the IRS rate” has created a binding obligation, and quietly discontinuing or inconsistently applying it can support a wage supplement claim even when base pay stays above the minimum.
Union Contracts and Individual Agreements
Collective bargaining agreements often contain specific mileage or travel expense terms. Failing to follow them is both a labor dispute and, if the reimbursement counts as a wage supplement, a potential wage law violation. Individual employment contracts can create the same commitment. New York courts have also found implied obligations where an employer maintained a consistent reimbursement practice over time, even without a written policy.
Which Driving Counts as Reimbursable
Not every mile counts. The line is whether the trip serves the employer’s business or is the employee’s personal commute.
Commuting Versus Business Travel
An employee’s normal trip between home and a regular workplace is a personal commute and is not reimbursable. Driving between job sites during a shift, visiting clients, traveling to off-site training, and making deliveries typically do qualify.
The IRS uses a distinction many employers borrow: travel between home and a temporary work location (an assignment expected to last a year or less) is treated as business travel rather than commuting, as long as the employee has a regular workplace elsewhere.5Internal Revenue Service. Publication 463 (2025), Travel, Gift, and Car Expenses
Employees Without a Fixed Workplace
Sales reps, field technicians, and home health aides who move between locations each day are a harder case. With no single “regular” workplace, the Department of Labor and the courts look at the employer’s directives and the nature of the role. Many employers treat the first and last trip of the day as commuting and reimburse everything in between, but the specifics should be written down to avoid disputes.
How Much Reimbursement Is Enough
New York law does not set a specific per-mile rate. Employers pick a method, and the choice affects both tax treatment and legal risk.
The IRS Standard Mileage Rate
The most common approach is paying the IRS standard business mileage rate, which for 2026 is 72.5 cents per mile.1Internal Revenue Service. IRS Sets 2026 Business Standard Mileage Rate at 72.5 Cents Per Mile, Up 2.5 Cents The rate bundles gas, insurance, depreciation, and maintenance into a single number. The Department of Labor has stated that reimbursement at the IRS standard rate is “per se reasonable,” meaning it is presumed to cover the employee’s actual costs.2U.S. Department of Labor. WHD Opinion Letter FLSA2020-12 The same rate applies to gasoline, diesel, hybrid, and fully electric vehicles, so employers do not need a separate rate for EV drivers.
Actual Expense Method
Some employers reimburse documented actual costs: gas receipts, maintenance bills, allocated insurance, and depreciation. This can be more accurate for high-mileage or unusual vehicles, but it creates a heavier recordkeeping burden on both sides, and the reimbursement must still reasonably cover what the employee actually spent.
Fixed and Variable Rate Plans
A FAVR plan splits reimbursement into a fixed monthly payment covering insurance, registration, and depreciation, and a variable per-mile payment covering gas and maintenance. These plans are more complex to administer but can be more precise for workforces with wide variation in driving patterns.6Internal Revenue Service. 2026 Standard Mileage Rates
Is the Reimbursement Taxed
Mileage reimbursement can be tax-free or fully taxable depending on how the employer structures the plan.
Accountable Plans
To keep reimbursements off the W-2 and out of payroll taxes, the employer must use what the IRS calls an accountable plan. Three conditions apply:7Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide
- The expense must be incurred while performing services for the employer.
- The employee must substantiate the expense within a reasonable period.
- The employee must return any reimbursement that exceeds the substantiated expense.
The IRS treats submission within 60 days of the expense, and return of any excess within 120 days, as reasonable by default.5Internal Revenue Service. Publication 463 (2025), Travel, Gift, and Car Expenses
Payments Above the IRS Rate
Reimbursement at or below 72.5 cents per mile for 2026 is not taxable income. Anything above the IRS rate is treated as wages and must be reported in Box 1 of the W-2, with income tax withholding and payroll taxes applied. Flat car allowances paid without expense documentation are fully taxable wages even if the total is less than what the IRS rate would produce.5Internal Revenue Service. Publication 463 (2025), Travel, Gift, and Car Expenses
What Employees Can Do If They Are Not Reimbursed
Workers who believe they were shortchanged have several paths to recover what they are owed, and the penalties for employers who lose these cases are significant.
Where to File
An employee can file a wage complaint with the New York State Department of Labor or bring a lawsuit in state or federal court. The two options are not mutually exclusive, and a DOL investigation is not a prerequisite to filing suit. New York’s statute of limitations for wage claims is six years, considerably longer than the federal FLSA’s two years (three for willful violations).8New York State Senate. New York Code Labor Law 663 – Civil Action9Office of the Law Revision Counsel. 29 U.S. Code 255 – Statute of Limitations A single employee’s claim can accrue a substantial balance before the employer even receives notice.
What a Successful Claim Recovers
A prevailing employee is entitled to the full amount of underpaid wages plus prejudgment interest. Unless the employer can show a good-faith belief it was complying with the law, the court will also award liquidated damages equal to 100% of the unpaid wages, effectively doubling recovery. Reasonable attorney’s fees are also available.10New York State Senate. New York Code Labor Law 198 – Costs, Remedies
The Department of Labor can impose civil penalties on top of what is owed to the employee. For repeat, willful, or egregious violations, the penalty can reach double the wages found due. Civil penalties for violations of New York’s kick-back prohibition under Section 198-b range from $2,500 to $5,000 per violation.11New York State Senate. New York Labor Law 218
When unreimbursed mileage pushes effective pay below the federal minimum wage, the employee can also sue under the FLSA for unpaid wages, an equal amount in liquidated damages, and attorney’s fees.12U.S. Department of Labor. Fact Sheet 16 – Deductions From Wages for Uniforms and Other Facilities Under the Fair Labor Standards Act (FLSA) Because New York’s minimum wage is so much higher than the federal rate, most claims will be stronger under state law, but the federal option adds another layer.
Retaliation Is a Separate Claim
New York Labor Law Section 215 prohibits firing, threatening, or otherwise retaliating against an employee who complains about a wage violation, whether the complaint goes to the employer, the Department of Labor, or an attorney. The employee does not need to cite a specific section of the law for the protection to apply.13New York State Senate. New York Labor Law 215 – Penalties and Civil Action; Prohibited Retaliation Retaliating against a worker who raises a mileage reimbursement concern creates a second, independent claim on top of the original wage dispute.