When it comes to reimbursement requirements for employee business expenses in California, there is good news and bad news. The good news is the legal requirements are among the broadest – if not the broadest – in the country. The bad news is that pertinent language in the state labor code is amorphous at best. That makes it difficult for non-lawyers to understand. And that can lead to some ugly disputes. With that in mind, we’ll try to clear things up a bit.
Reimbursements Required Under California Labor Code Section 2802
Section 2802 of the California Labor Code mandates that employers reimburse employees for any expenses the employee incurs “in direct consequence of the discharge of his or her duties.” Reimbursement of any expenses an employee incurs while following his or her employer’s instructions is also required, even when they are illicit. The only exception to the latter is if the employee believed the instructions were illicit when he or she carried them out.
Rather than using simple language, however, lawmakers used the term “necessary expenditures or losses.” In this context, “necessary expenditures and losses” are broadly defined as “all reasonable costs, including, but not limited to, attorney’s fees incurred by the employee enforcing the rights granted by this section.”
Of course, that begs a very important question. What are “reasonable costs?”
Classification of work-related expenses
Clearly, there is no universal answer to this question, since jobs and job duties vary so greatly. This is why many Los Angeles area employers have policies specifically defining which work-related expenses are eligible for reimbursement.
In most (but not all) cases, these expenses include:
- Use of a personal cell phone for work-related purposes
- Travel costs (for transportation, accommodations, etc.)
- Uniforms
- Training/continuing education
- Costs associated with attendance at trade conferences or similar events
- Stamps and so forth
- Costs associated with entertaining customers, clients or associates
- Mileage, tolls, and gas when a personal vehicle is used for business
When expenses are only partially work-related, reimbursement is calculated and made accordingly.
Methods of reimbursement for work-related expenses
The next issue is how reimbursement must be made. In other words, is direct reimbursement the only option for California employers?
The California Supreme Court answered this question in Gattuso v. Harte-Hanks Shoppers 42 Cal.4th 554 (Cal. 2007). Specifically, the Court ruled that in lieu of direct payments, employers could fulfill the reimbursement requirement by providing extra compensation “in the form of increases in base salary or increases in commission rates, or both.”
However, the Court included an important caveat in its ruling. This is that California employers can only exercise these options if there is a way to differentiate “what amount is being paid for labor performed and what amount is reimbursement for business expenses.”
How reimbursement requirements affect employees working from home
But what if you have been working from home during the COVID-19 lockdowns?
In this case, the answer is simple. Your employer must still reimburse you for any work-related expenses you have incurred in order to keep doing your job. This means your employer must reimburse you if you paid for any of the following while working from home:
- Home office equipment
- Home office supplies
- Costs associated with teleconferencing and/or video conferencing
If you used your home Internet for work-related purposes, you employer is also responsible for reimbursing you accordingly.
You should be aware, however, that anything you have purchased to facilitate remote work technically becomes your employer’s property after reimbursement. This means you may have to relinquish these items if you are fired.
So, let’s say you bought a new laptop and webcam to facilitate remote work during the COVID-19 lockdown because you did not want to use your personal computer for work. Once your employer reimburses you for the new equipment, the equipment becomes company property. If you are fired or take a new job, the company could require that you surrender that equipment.
Contact Los Angeles employee expense reimbursement lawyers today
As a California employee, you have the right to pursue legal recourse if your employer does not reimburse you for work-related expenses. At the Law Office of Parag L. Amin P.C. (“LawPLA”) our legal team has the skills and experience to help you do so. Just give us a call or contact us online to learn more. We look forward to hearing from you.
