California Employment law requires employers to reimburse employees for all “necessary” expenses they incur while performing their jobs. This rule, embodied in California Labor Code Section 2802, prohibits employers from shifting their costs of doing business onto the backs of employees.
What Every California Employee Should Know about Work-Related Expense Reimbursement
The most common types of expenses employees incur in performing their jobs and that employers are required to reimburse include the cost of:
- Providing a personal vehicle (“mileage expense” or “mileage reimbursement”).
- Providing personal a cellular telephone or smart phone.
- Purchasing and caring for uniforms.
- Costs of remote work or working from home (personal cell phone, home internet service, home office equipment, supplies, etc.).
- Cost of purchasing tools.
- Cost of purchasing supplies.
- Costs of defending an employee from a work-related lawsuit.
What Does Section 2802 Say?
California Labor Code Section 2802 states that employers must “indemnify” an 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.”
This means that if the expense in question is “necessary” for performance of the job, the employer must reimburse the employee 100% of the cost. An expense is considered “necessary” if it directly results from the employee’s performance of his or her work duties. An expense is also “necessary” if it occurs because the employee is following the directions given by the employer.
Section 2802 Requires the Employer to Pay Legal Expenses Needed to Recover Work-Related Expenses
One of the most important aspects of Section 2802 is its provision that “necessary” expenses include “attorney’s fees incurred by the employee enforcing the rights granted by this section.” This means that if the employer fails to reimburse for expenses as they are incurred, it must pay the employee’s cost of hiring an attorney to recover those costs in a lawsuit. Otherwise, it would rarely make economic sense for an employee to file a lawsuit to recover unreimbursed work-related expenses.
Section 2802 Requires the Employer to Pay Interest on Unreimbursed Expenses at a Rate of 10%
In addition to requiring employers to pay the cost of a lawsuit to recover unreimbursed expenses, Section 2802 requires an employer to pay interest on all unreimbursed amounts at a Rate of 10% per year.
How Must Reimbursement Payments Be Made?
Section 2802 does not specify how the employer may pay reimbursement to the employee. Courts interpreting Section 2802 require employers to reimburse 100% of all “necessary” expenses, however that is accomplished.
Reimbursement may be made as expenses are incurred or in a in a bulk amount. Employers are also free to pay a higher wage or commission in order to cover employee expenses. However, any additional amounts included as wages must be sufficient to compensate for 100% of expenses after taxes. In other words, the employee’s after-tax pay must be sufficient to cover all expenses in addition to regular wages. For this reason, reimbursement payments are often separate from taxable wages.
If Your Employer Has Failed to Reimburse You Fairly, Contact Our Orange County Office Today
The Orange County based Law Offices of Corbett H. Williams is an elite employment law firm that represents employees in discrimination, harassment, retaliation, wrongful termination, wage & hour and other employment matters. Strict time limits may apply to your claim, so you shouldn’t wait. Contact us today at 949-679-9909 or use the contact form on this page, and we will respond promptly.