What business expenses are subject to reimbursement by my employer?

by | Oct 1, 2022 | Firm News |

California Labor Code 2802 is the law that requires employers to reimburse workers for “all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.” Employers that fail to do so can face a wage and hour lawsuit. The statute allows employees to recover attorneys’ fees, in addition to reimbursement.

Are California employers required to reimburse workers for business expenses?

Yes, California Labor Code section 2802 mandates employer reimbursements for work-related expenses that are incurred by their employees. The purpose of this section is to prevent California employers from merely shifting the necessary expenditures of running a business onto their employees.

Employers cannot get their employees to waive their right to these reimbursements. Even if there is a provision in the employment contract that tells employees they have no right to reimbursement, that provision is null and void and will not be enforced in court. Employers who fire workers because they have invoked their rights to be reimbursed can be liable for wrongful termination.

What reimbursement does Labor Code 2802 require?

To be eligible for reimbursement under California Labor Code 2802, the expense has to be both reasonable and necessary for the employee to do his or her job. The employee has to incur the costs as a direct consequence of his or her job duties. The details and requirements of an employee’s job will determine whether an expense is work-related and eligible for reimbursement. Many employers have reimbursement policies that set out which expenses are eligible.

Common work-related expenses that are eligible for reimbursement can include:

  • travel expenses,
  • business use of a personal cell phone,
  • fees for attending conferences,
  • costs of a work uniform,
  • expenses related to entertaining business associates,
  • driving costs, including a mileage reimbursement for distance traveled and tolls paid in a personal vehicle,
  • costs associated with using a personal cell phone for job duties,
  • postage, and
  • training or education costs.

Some of these expenses are often only partially work-related, like the cell phone bills for an employee’s personal phone that is frequently used for business purposes. In these cases, a percentage of the employee’s actual expenses can be reimbursable. That percentage has to reasonably reflect how often the expense is work-related.

How does this affect California employees doing remote work?

An employee’s right to be reimbursed for business expenses has become more important since the coronavirus pandemic. The pandemic has closed offices and made employees work remotely. To continue to do their jobs, many of these workers have had to buy home office and telecommuting equipment. Because that equipment is reasonably necessary for the employee’s work, it can be eligible for reimbursement.

Some common reimbursable expenses for remote work include:

  • office equipment, like chairs and desks,
  • printing equipment, including the printer, paper, and ink,
  • the costs of online subscriptions, like a paid Zoom account,
  • home utilities, like air conditioning and heating, and
  • home internet bills.

Because these are business expenses, they can be reimbursed by the employer. When the employer reimburses their employee, though, the company owns property that was purchased. If the employee is discharged, he or she may have to hand over what was bought, as it is company property

Determining whether you are entitled to reimbursement for expenses depends on the specific facts of your case. Often times, an employer’s failure to reimburse an employee for expenses also coincides with other Labor Code violations including failure to pay overtime and provide legally mandated meal and rest breaks.

Schedule a consultation with Jay S. Rothman & Associates to determine whether you are entitled to whistleblower protections.