California Expense Reimbursement Claims
Wage and hour claims can take several forms–in California, business expense reimbursement claims are one of these. The general reimbursement law is contained in California Labor Code Section 2802, which 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.”
When employers fail to properly compensate workers for the business expenses they incur, the employees are entitled to recover their unreimbursed expenses, plus interest and penalties.
In some cases, employers place unreasonable (and often illegal) limitations on the employee’s filing for reimbursement, however, an employer’s internal rules are secondary to the statutes concerning California expense reimbursement claims.
The purpose of California’s business expense reimbursement law is to prevent employers from passing on their operating costs to their employees. Whether an expenditure is “necessary” will depend on the facts and circumstances, the nature of the employment, and whether the employer should have anticipated that an employee would need to make the expenditure. However, when an employee has been instructed to purchase something or to incur a specific expense (eg. cell phone and/or internet access to work from home), they will almost always be entitled to reimbursement for it.
To determine if your situation is a violation, the help of an experienced wage and hour overtime attorney is invaluable.
Q: What are some examples of the types of expenses that should typically be paid or reimbursed by my employer?
- Tools and equipment
- Safety gear (e.g. armored transport employees – firearms and ammunition)
- Salesperson’s expenses – including cell phone expense, internet access, travel and hotel/motel costs
- Mileage driven during work (excluding commute to and from work) for work related activities
- Buying uniforms with company logos or uniforms that cannot be worn after work (e.g. restaurant employees and security guards)
- Work related training, seminars or education – but typically not license fees. California’s Division of Labor Standards Enforcement has taken the position that employee licenses are not the type of costs that need to be reimbursed where the licenses are required by law.
- Other job related purchases that are for the benefit of the employer
Remember: just because your employer has always had certain rules regarding expense policies does not mean that it is or even has been legal, and any time an employer changes policy to eliminate expense reimbursements you should verify that it is legal.
Q: In California, can my employer refuse to reimburse me for the purchase of office supplies I was sent to get because I lost my receipt and didn’t fill out the paperwork in the time frame described in the handbook?
Probably not. Just because the employee handbook states a policy, or something has always been done a certain way doesn’t mean that it is right, just, or legal and California expense reimbursement claims are certainly a good example of this.
This means that in California, companies must reimburse their employees for expenses when they know or have reason to know that the employee has claim for a reimbursable expense. If so, then the company must do everything possible (“exercise due diligence”) to make sure that the employee is suitably reimbursed.
Does this mean that employers cannot set internal deadlines and standard operating procedures for reporting and paying expenses? No. However, employers should also realize that an employee’s failure to comply with their guidelines is NOT a legal defense for not paying a expense that was incurred in good faith.
Q: I left my old job a month ago, and was recently told that having me sign an agreement when I was hired that they didn’t have to reimburse me for some expenses I had to incur because of my job was not legal. Is that true? My former employer told me I had to purchase my own power tools that I needed to do the job I was hired to do. Is that right!?
Maybe—it depends on what your hourly wage was. § 8 of the Industrial Welfare Commission Order No. 16-2001 requires employers to provide and maintain uniforms and equipment required by employees to do their jobs unless the employees are paid at least twice the minimum wage or more.
The foundation for most California expense reimbursement claims is California Labor Law 2802 which mandates that all employers must reimburse their employees for all expenses required to do their jobs. In addition to uniforms and tools, other expenses that employees may be entitled to be reimbursed for include office supplies (particularly if the employee works at home), cell phone usage related to work, automobile expenses when traveling to customers, internet service if necessary to performing duties, etc. Employees are encouraged to keep an itemized log of expenses and all receipts.
California employees are protected by law in many ways in addition to expense reimbursements: minimum wage laws, overtime pay laws as well as stringent exempt employee classifications.
If you think that you have a valid California expense reimbursement claim or some other overtime law claim, fill out the Case Evaluation Form as completely as you can and one of our Lore Law Firm overtime attorneys will review your case to see if you may be eligible for recovery of the unreimbursed expenses or unpaid wages you may be owed.