Electric vehicles (EVs) are a smart way of electrifying your fleet, reducing your carbon footprint, and slashing fleet costs. However, there’s the issue of reimbursement for employees who charge their vehicles at home.
Many businesses are unaware that they may be required by law to reimburse these expenses, but doing so can be a complicated headache. With EV sales increasing every quarter since Q3 2021, this problem is set to grow in prominence as time goes on.
Here are the three legal ways to reimburse employees for home EV charging.
Let’s start with the obvious.
In many states, businesses must legally reimburse employees if they recharge their work vehicles at home. This has been codified within Section 2802 of the California Labor Code. It’s an issue that has already found its way to court, with the requirement being clarified.
Reimbursing fleet drivers is mandated, but managing home reimbursement charging is another challenge entirely. So, what are the three ways you can reimburse drivers?
Home charging reimbursement methods were outlined in the landmark case that clarified Section 2802. Known as Gattuso v. Harte Hanks Shoppers Inc., the results outlined the legal ways employees must reimburse for home charging, which are:
1. Lump sum payments
2. Mileage reimbursement
3. Actual expense reimbursement
Every method has its pros and cons. Fleet managers must weigh each to determine what works best for their businesses.
Lump sum payments, or a flat fee allowance, is the easiest option to use. Employees receive the same monthly amount, regardless of how often they charge their EV at home. Since it’s not correlated with how much power is actually used, it’s the least efficient and costliest option.
In many cases, businesses are forced to overpay employees because if they accidentally underpay them for a single month, they could open themselves up to legal action. Plus, it doesn’t incentivize at-home charging because they receive the money either way.
An alternative solution is to use the standard mileage reimbursement rate set by the Internal Revenue Service (IRS). This allows businesses to reimburse based on the mileage driven since there’s no set IRS rate for home EV charging.
Naturally, this is the least economical method because the standard mileage reimbursement rate makes no distinction between gasoline-powered and EV vehicles. In essence, businesses using this option are likely to overpay dramatically.
Real cost reimbursement provides employees with payments based on actual costs, such as home electricity costs. However, while this is the most accurate option, it’s also the most complex to manage.
Opting for real cost reimbursement could save businesses thousands on their fleet costs. Managing this requires dedicated solutions, such as advanced telematics data.
At Bluedot, we understand the benefits of real cost reimbursement and the complexities of implementing it. This is why we’ve released a brand-new home charging reimbursement solution.
We rely on advanced telematics and next-generation integrations to do away with Excel spreadsheets to provide the utmost tracking accuracy and streamlined reimbursement processing times. To learn more