Where an employer fails to reimburse a California employee for mandatory business expenses, the employee has a claim for damages. Thus, employment attorneys have had relatively little guidance from the courts on how Labor Code, section 2802 should be interpreted. California Law Addresses Employee Business Expense Reimbursement. The primary case is Gattuso v. Harte-Hanks Shoppers, LLC, in which the California Supreme Court outlined the employer’s obligation with regard to California’s Expense Reimbursement Laws. Given the various costs associated with owning a vehicle, it would be quite complicated to calculate the actual cost that must be reimbursed. And the California Division of Labor Standards Enforcement (“DLSE”) has said the employer may impose reasonable limits on employee expenses. However, Labor Code section 2802 does not state how employers must provide reimbursement. California law requires employers to reimburse employees “for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.” Cal. The Manual is not binding legal authority. How much reimbursement is enough? Fortunately, the Division of Labor Standards Enforcement has said that the IRS’ mileage reimbursement rate is a “presumptively reasonable” reimbursement rate. Labor Code Section 2802. For example, when an employer requires the employee to maintain a certain level of insurance coverage, the DLSE has said the IRS mileage reimbursement rate would not be sufficient. As stated above, an employer must reimburse an employee for 100 percent of any “necessary expenses,” which California law defines as for the actual costs incurred in … The DLSE has opined the same rule applies to expense reimbursements. 2802. Employers may require employees to supply their own hand tools (1) if the employees earn at least twice minimum wage, and (2) the hand tools are customarily required in the trade. The Department of Labor Standards Enforcements (DLSE) is chartered with enforcing California’s employment laws. There are no bills pending in the California Senate or House of Representatives to change Labor Code, section 2802 or Labor Code, section 2804. We went to court. The employer did not exercise due diligence towards reimbursement. This rule, embodied in California Labor Code Section 2802, prohibits employers from shifting their costs of doing business onto the backs of employees. Astanehe Law has experience handling California failure to reimburse claims. Typically, California employees are entitled to reasonable reimbursement for mandatory business expenses such as, traveling for work in a personal vehicle, using a personal cell phone for calls, email, or messaging, using a personal computer for work, using personal utilities, including personal internet, while working from home, and purchasing tools and inventory for the employer. If your employer has failed to reimburse you for mandatory business expenses, contact Astanehe Law. Please contact Astanehe Law for advice on specific legal issues. Necessary expenditures include any attorney fees or costs incurred by employees to recoup expenses … The IRS rate may not always be viewed as reasonable, however. But very few employment attorneys have presented appellate courts with issues related to Labor Code, section 2802 and California Expense Reimbursement. He lost. California Labor Code section 2802 obligates employers to reimburse employees for “all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, …” A public hearing on the proposed regulations was held on February 7, 2007 in San Section 2802 of the California Labor Code requires employers to reimburse their employees for the reasonable and "necessary" expenses they incur in direct consequence of discharging their job duties. Gattuso at p. 571. Under California Labor Code section 2802, employers must reimburse California employees for reasonable and mandatory business expenses incurred while carrying out job duties. 4th 554 (2007), the California Court of Appeal determined that California employees may receive reimbursement under Labor Code section 2802 as a separate reimbursement or through enhanced compensation. There does not seem to be any prohibition against employers’ requiring their employees to submit expense reports and obtain reimbursement of expenses. Thus, employers must adequately reimburse employees. Thus, employer policies that waive an employee’s right to expenses after a certain deadline are not enforceable. Necessary expenditures or losses include all reasonable costs. Employees’ failure to comply with expense reimbursement policies should be treated as disciplinary issues rather than grounds for refusing to pay the expense. Where an employer offering enhanced compensation for reimbursement fails to satisfy the above-mentioned requirements, the California employee has a legal claim. Expense reimbursement may seem like a small issue in comparison with the other areas of liability facing California employers, but the exposure for not appropriately reimbursing employees can be substantial. What Is Sexual Harassment In The Workplace? Necessary expenditures or losses include all reasonable costs. There are a number of laws and regulations that require employers to reimburse expenses that employee incur or to pay for employees use of their own property. California Labor Code Section 2802 states an employer shall indemnify his/her employee for all necessary expenditures or losses incurred by the employee in the direct consequence of the discharge of his/her duties. But several cases do shed light on appropriate expense reimbursement practices. The Legislature’s intent is that employees should not bear losses or expenses incurred in the service of their employers. by clicking "Submit. . Under section 2802 of the California Labor Code, “[an] employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.” Cal. California Labor Code Section 2802. One common reimbursement method is to provide the California employee separate reimbursements for actual expenses. Aside from DLSE opinion letters, the DLSE also published a manual, entitled the Department of Labor Standards Enforcements Manual. What is reasonable for one employer and employee might be different for others. .”. What costs are subject to expense reimbursement? . This article provides employers with analysis and tips related to expense reimbursement of remote workers in California. Employers in California must reimburse remote employees for expenses they necessarily incur in ... expense they incur under California Labor Code Section 2802. The employee wanted both hourses replaced at company expense (what with them being matched Arabians) and used CA labor code 2802 as part of the justification. Blog || Employee Rights Guides || Investor Rights Guides || Wrongful Termination || Stock Broker Fraud || Newsroom || Terms of Use || Privacy Policy || Site Map Michael M. Astanehe || ASTANEHE LAW || 71 Stevenson Street, Suite 400, San Francisco, California 94105 || Astanehe Law Knows Your Rights.Phone Numbers San Francisco   ||   (415) 226-7170           Oakland   ||    (510) 822-2111Email || contact@astanehelaw.com. “The Court concludes that a fair interpretation of [Labor Code] §§ 2802 and 2804 which produces “practical and workable results,” consistent with the public policy underlying those sections, focuses not on whether an employee makes a request for reimbursement but rather on whether the employer either knows or has reason to know that the employee has incurred a reimbursable expense. Under such circumstances, the employer must make up the difference. In response, the DLSE may issue “opinion letters” detailing the DLSE’s position regarding the law and the facts put forth to them. California Labor Code section 2802 requires employers to reimburse employees for their expenses. What does this mean to employers and employees? The general reimbursement statute of the California Labor Code is Section 2802. Gattuso at p. 575. Otherwise, the California employee has a claim under California Labor Code section 2802. 4th 1137 (2014). Terms of Service apply. There is a narrow exception to this requirement. This means if the out of pocket cost was required for you to complete your job duties, or your boss directed you to spend your own money to accomplish a task for your employer, your employer must pay you back. This manual also sets forth the DLSE’s position regarding California’s expense reimbursement laws, including Labor Code, section 2802. Employers may reimburse employees in several ways. (a) An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful. The penalties over the period of non-payment, plus the attorney’s fees can be substantially greater than the expenses. In Gattuso, the California Court of Appeal concluded that California employers could satisfy their California Labor Code section 2802 reimbursement obligations through separate reimbursements, or paying California employees enhanced compensation. California Labor Code section 2802(a) states: “An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful.” A California employee forced to use personal property for mandatory business-related activities is entitled to reimbursement. In the state of California, these lawsuits are fast becoming the rule, not the exception, because California Labor Code section 2802 is particularly strict. Id. First, you can bring an individual action in State Court or by filing a complaint with the California Labor Board. Unpaid Employment Expenses Likely Have Up To a Four Year Statute of Limitations, but Penalties May be Forfeited After One Year. Labor Code Sections 1197.1 and 2802 have such mandates. Where a wage statement containing enhanced compensation fails to include this, the California employee may have an inaccurate wage statement claim under California Labor Code section 226(a). CA 2802 The attorney responsible for all communications herein is Zachary Crosner, Esq. Here, the employer risks that an employee could earn less commission income than anticipated, and have the effect of failing to provide sufficient reimbursement for total expenses incurred. The Obligation to Reimburse Business Expenses. Division 3, Employment Relations; Chapter 2, Employer and Employee; Article 2, Obligations of Employer; Section 2802. The courts have said that “necessary” means “reasonable” under the circumstances. and CROSNER LEGAL, P.C. ", © 2020 Crosner Legal. California’s Labor Code, section 2802 has been on the books for decades. Cochran v. Schwan’s Home Services, Inc., 228 Cal. Labor Code Section 2802 Requires Employers To Indemnify Employees. Section 2802 does not specify how employers must reimburse employees. Employers that follow California Labor Code section 2802 must promptly reimburse California employees for mandatory business expenses. For the most part, they say surprising little. California Labor Code § 2802. There are multiple ways to prosecute a claim under Labor Code section 2802. But it does offer significant information with respect to how the DLSE approaches California’s expense reimbursement laws, even including several factual scenarios. In Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal. . There also appears to be no legal basis supporting employers’ policies denying reimbursement when expense reports are submitted untimely or incorrectly. California Labor Code §2802. Lab. This Labor Code section permits individual to not only recover the amount of the reimbursement they are owed, but also attorneys’ fees as well. If the employer requires the employee to drive, such as a courier driver, an outside sales person, the employer must cover the employee’s mileage. As is a frequent practice, the legislature left this question for future examination by the judiciary. Under California Labor Code section 2802, employers must reimburse California employees for reasonable and mandatory business expenses incurred while carrying out job duties. Employers desire increased transparency into the reimbursements it is distributing. Reimbursement for mobile employees can be tricky and ambiguous for companies across the country. This article examines California employee reimbursement methods that satisfy California Labor Code section 2802. Labor Code Section 2802 Requires Employers To Indemnify Employees, Employees’ Business Use Of Personal Property, California Expense Reimbursement Law Does Not Allow Employees To Waive Their Rights, What Do The Courts Say About Labor Code, Section 2802 And How California Expense Reimbursement Laws Should Be Enforced, The Department Of Labor Standards Enforcements’ Position On California Employment Expense Reimbursement Laws, How To Prosecute Labor Code Section 2802 Claim. California has seen the cycle of this disconnect for decades. California Employment law requires employers to reimburse employees for all “necessary” expenses they incur while performing their jobs. Lab. Id. Please upgrade today! Code § 2802(a). If you are a bona fide employee in California and have to pay costs out of your own pocket in order to perform your essential job duties, California Labor Code 2802 is designed to protect you. Employee desire reimbursement for his or her actual expenses. All Rights Reserved. Additionally, the reimbursement amount must reimburse the California employee for all expenses incurred. The time limit is not defined in days. There are always two side to any dispute and CA-DLSE always listens to both sides. Read this complete California Code, Labor Code - LAB § 2802 on Westlaw FindLaw Codes are provided courtesy of Thomson Reuters Westlaw, the industry-leading online legal research system . If you feel that you have a case or issue regarding business expenses that you were forced to pay for but were never reimbursed, please consult a California employment law attorney. This website is an advertisement for Crosner Legal, P.C. The employer knew or had reason to know of the expenditures; and, 4. . An Employer’s Duty to Reimburse. California law protects employees who use their own money or equipment at work. Michael Astanehe has recovered millions on behalf of Californians. Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal. Information on this website may not constitute the most up-to-date legal information. The Industrial Welfare Commission’s wage orders require employers to furnish all tools and equipment necessary to do the job. ... California Labor Laws on Employee Expenses. The part that is not so simple, however, is how the employer calculates the employee’s reimbursement amount and how the reimbursement is paid. When a California employee receives commission-based enhanced compensation, the employer chooses to link expense reimbursement with employee performance. California Tenants: Click for our Complete Guide to COVID-19 California Tenant Protections, California Employee Coronavirus/COVID-19 Disability Discrimination, California Employee Expense Reimbursement Lawsuit. © 2020 Astanehe Law || This website includes general information about legal issues and developments in the law. So CLC 2802 is not a sure thing, just a big hill for the employer to climb. 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