Answer: First let me say I am not an attorney so you should get your own legal advice on these issues that are relevant for your business in your state. A few things come to mind…
(1) Your employee is correct that that the federal government does has the legal allowable reimbursement amount set for 2011 at $.51/mile…your employee is not a federal employee. They work for you. And to my knowledge there is no federal law that requires that you pay that reimbursement amount, only the IRS states that if you reimburse higher than that rate then the employee may be subject to income tax on the amount exceeding the allowable reimbursement. To my understanding your company policy is what determines what you have to pay.
(2) You want to be sure that your reimbursement amount is fair and well explained to your staff. The amount should amply cover gas costs with a little extra for wear and tear, oil and insurance. Many companies in the industry pay somewhere between $.20 and $.51/mile.
(3) Now I noticed you are in California which does generally have some extra labor hoops than other states may have so I did a little poking around and found that there seems to be a California state law that says that you should reimburse your staff for actual expenses. So, you first want to check your state’s labor laws for the exact requirement, and then you may want to do some calculations and documentation to be sure that you can prove that you meet that requirement if the question comes up again. Definitely get your own legal advice on this issue so you are comfortable. California Labor Laws http://www.dir.ca.gov/dlse/DLSE-FAQs.htm . More information specifically on Travel Time and Travel Expense reimbursement http://www.dir.ca.gov/dlse/wages.pdf .
(4) Look up your state laws and do your best to comply with your regulations, be fair to your staff members and consult legal advice for a quick once over of your policies and you will have the confidence to move forward.
Question: I have not done a price increase since spring of 2008 due to the economy, and I need to do one since my Worker’s Compensation, Unemployment insurance and gas reimbursements have recently gone up. Do you think a price increase will be possible this year?
Answer: Yes, I do think that a price increase could be possible this year, depending on a few things. Price increases have successfully begun to occur for some of my clients starting about 6 months ago after the recession imposed moratorium on that sort of thing. It’s not that it was not possible before, but may have been a little risky. If after checking your competitor’s prices and the quality of results that your teams are producing in the field, you feel that it is time for you service to increase, then with careful handling it probably can. A recent poll showed that this is likely to be a rising year for prices. Food costs are expected to rise 6%, clothing 10% and gasoline 13% or more. With this in mind a couple things to consider
(1) Consumers have less to go around, so you better be worth the money, the amount of the increase should be fair and justifiable and you should handle the price increase very carefully.
(2) Increases in prices like this survey indicates mean that inflation across the board has a chance of sneaking its head into the economy where it has not been for a long time. That means you may have more expense hikes coming your way this year then you can see now. Calculate carefully how much your price increase should be since you will likely have one shot at getting it right and then have to wait another 12 months before another across the board adjustment would be accepted by your clients.
(3) Of course you can do this on your own, but if you are looking for a short cut to a quicker and easier price increase you may find my “Painless Price Increase” kit helpful. You can see from the description that the kit includes several sample letters for different circumstances, as well as detailed instructions about how to conduct the price increase, what to do if clients object and how to have the best outcome. Click here to learn more about the “Painless Price Increase” kit.