Unreimbursed Expenses

As a California employee, it should not cost you anything to do your job. California Labor Code section 2802 obliges an employer to reimburse an employee for all necessary expenditures or losses incurred by the employee in carrying out job duties or employer directives. This obligation cannot be waived by the employee. The purpose of the law is to prohibit employers from passing on their operating expenses onto their employees for items such as uniforms with company logos on them; tools and equipment; register shortages (such as when a restaurant customer leaves without paying); or protective equipment such as hard hats or respirator masks.

The employer’s duty to reimburse expenses is triggered when it either knows or has reason to know that the employee has incurred a reimbursable expense. If it does, it must exercise due diligence to ensure that each employee is reimbursed.

For example, under Section 2802, if your employer requires you to furnish your own vehicle to be used in the course of employment, whether to drive to customer locations, drive to the bank to make deposits, or drive to make business-related deliveries, it would be obligated to reimburse you for the costs necessarily incurred by you for use of the vehicle. The Department of Labor Standards Enforcement accepts the mileage reimbursement used by the IRS as reasonable. Beginning on January 1, 2018, the standard mileage rates for the use of a car, van, pickup or panel truck is 54.5 cents for every mile of business travel driven (up 1 cent from the 2017 rate). This allowance takes into account vehicle-related expenses, including fuel, maintenance, repairs, depreciation, tires, and insurance.

Also, if your employer requires that you open a bank account to receive your pay by direct deposit, your employer must then pay you for any cost involved in opening or operating that bank account. Costs of insurance required by an employer are recoverable under the provisions of Section 2802.

Additionally, your employer cannot require you to use your own personal cell phone, laptop, or tablet for work without reimbursing you for the costs of providing those items. This is true even if you use your phone/laptop/tablet for both personal and work purposes. Reimbursement is always required.

An employer may also be required to reimburse you for the costs of your defense as well as any settlement or judgment resulting from a third-party action based on conduct within the course and scope of your employment. In addition, the term “necessary expenditures or losses” includes “all reasonable costs, including, but not limited to, attorney’s fees incurred by the employee enforcing the rights granted by this section.”

An employer may satisfy its statutory obligation under section 2802 by paying an increased salary or commission, provided a means or method is established to determine what amount is being paid for labor performed and what amount is being paid as reimbursement for business expenses.

Our firm has successfully litigated numerous cases involving violations of Labor Code section 2802. In many of those cases, the employer attempted to claim it paid expenses through an enhanced commission structure. Nevertheless, we were able to help our clients receive reimbursement for vehicle expenses, cell phone expenses, internet expenses, office supplies, and expenses for novelty items to distribute to customers, among other expenses. Several of the cases involved six-figure individual awards.

If you have been required to bear necessary expenses in carrying out your job duties without being reimbursed, let our team of skilled and experienced attorneys and paralegals help you recover the monies owed to you.