California Expenses Reimbursement Law

California Expenses Reimbursement Law

California has specific labor laws related to the reimbursement of employee business expenses. The expense reimbursement law can be found in California Labor Code Section 2802.

1. California Labor Code Section 2802:
   • Section 2802 of the California State Labor Law requires employers to reimburse employees for “necessary” expenses they accrue as part of his or her duties.
   • The law states that an employer will compensate employees “for all necessary operating expenses or losses incurred by the employee.”
2. Necessary Expenses:
   • Expense reimbursements refer to such expenses that are reasonable costs and that are directly related to the employee’s job duties. This can include, but is not limited to, business-related travel, an employee’s telephone service, business mileage, attending conferences, meals, personal cell phones, internet access, and other required job-related equipment.
3. Business-Related Mileage Reimbursement:
   • California employers are generally required to reimburse California employees for business-related mileage at a rate set by the state, or California court. This rate is adjusted annually by the California Division of Labor Statistics and Research.
4. Receipts and Documentation:
   • Sometimes, an employer requires that employees submit appropriate receipts or documentation for common work-related expenses, or to fill out an expense reimbursement form. However, the lack of receipts does not absolve the employer of their obligation to reimburse workers if the expenses were necessary for work duties.
5. Employer Policies:
   • Employers may establish written policies for the submission and reimbursement of employee expenses.
6. Civil Penalties:
   • Failure to comply with the reimbursement requirements under Section 2802 can result in penalties against employers. Employees may pursue legal action to recover a reasonable amount of any unpaid expenses.
7. Enforcement and Legal Action:
   • Employees who believe they have not been properly reimbursed for necessary expenses can file a claim with the California Division of Labor Standards Enforcement (DLSE) or contact Mr. Justice and his team of California employment attorneys at Lawyers for Justice, PC (LFJ). LFJ offers FREE consultations to those who call the firm at (844) 568-1702.

It’s important for both employers and employees to be aware of the reimbursement requirements and ensure compliance with California labor laws. Employers should establish clear policies, communicate them to employees, and promptly reimburse necessary and reasonable expenses incurred during the course of employment. And likewise, employees should be aware of their rights and take appropriate steps to seek reimbursement when required.

Labor Code 2802 Penalties

Under California Labor Code Section 2802, employers are required to reimburse employees for all necessary expenses or losses incurred as a direct consequence of the employee carrying out their job duties. This law is designed to ensure that employees are not paying for out-of-pocket expenses related to their work, such as purchasing necessary supplies, using personal vehicles, or paying for business travel.

Employees who are not properly reimbursed can seek the following penalties and damages:

1. Reimbursement of Expenses:
   • Full Reimbursement: The primary remedy under Labor Code 2802 is the reimbursement of all necessary and reasonable expenses incurred by the employee. This includes expenses for tools, uniforms, travel, and any other costs required to perform their job duties. The reimbursement must cover the full cost of the expense, not just a portion.
   • Interest: If an employer fails to reimburse the employee promptly, the employee is entitled to interest on the amount owed. The interest is calculated at a rate of 10% per annum, accruing from the date the expense was incurred.
2. Legal Fees and Costs:
   • Attorney’s Fees: Labor Code 2802 also entitles the employee to recover reasonable attorney’s fees and costs incurred in pursuing reimbursement. This provision ensures that employees can afford to seek legal representation to enforce their rights under the law​.
   • Court Costs: In addition to attorney’s fees, employees can also recover other court costs associated with their legal action, such as filing fees and deposition costs.
3. Penalties for Violations:
   • While Labor Code 2802 does not specify penalties beyond reimbursement and legal costs, employers who violate this law may face additional penalties under other California labor laws.
4. Retaliation Protections:
   • Employers are prohibited from retaliating against employees who request reimbursement under Labor Code 2802. If an employer retaliates against an employee for asserting their rights, the employee may be entitled to additional damages, including compensation for lost wages, reinstatement, and punitive damages .

California Mileage Reimbursement Law

In California, employers are generally required to reimburse employees for business-related mileage expenses if travel is part of an employee’s job duties.

1. Mileage Reimbursement Rate:
   • California law does not mandate a specific mileage reimbursement rate. The California Division of Labor Statistics and Research typically sets a standard mileage reimbursement rate. Employers are generally expected to reimburse at a rate that is reasonable and covers the actual expenses incurred by the employee.
2. IRS Standard Mileage Rate:
   • Employers often use the standard mileage rate set by the Internal Revenue Service (IRS) as a guideline for mileage reimbursement. The IRS standard mileage rate is a standard amount per mile that the IRS sets annually for various business-related uses of a personal vehicle.
3. Actual Expenses vs. Standard Mileage Rate:
   • Employers can choose to reimburse based on the actual expenses incurred by the employee (like gas, maintenance, and insurance) or by using the standard mileage rate. The chosen method should reasonably reflect the employee’s actual expenses.
4. Record Keeping:
   • Part of an employee’s duties for claiming a reimbursement could be to submit documentation or receipts to their employer in support of their reimbursement claims. It’s important for employees to keep accurate records of their work-related expenses.
5. Failure to Reimburse:
   • A direct consequence of employers not complying with the reimbursement requirements under Section 2802 can lead to legal issues. Employees can pursue legal action to recover unreimbursed expenses and to prevent employers from taking advantage of them again.

California Work From Home Expenses & Reimbursement

In California, employers may have certain responsibilities when it comes to reimbursing remote workers for expenses related to working from home. For those who work remotely, the same law under California Labor Code Section 2802, applies, which requires employers reimburse employee’s for expenses they accrue.

Here are key points regarding work-from-home reimbursement in California:

1. Home Office Expenses:
   • Expenses related to creating and maintaining a home office, such as internet costs, utilities, and office supplies, may be considered reimbursable. However, the specifics can depend on the nature of the work, what are deemed as necessary expenditures, and the agreement between the employer and employee.
2. Use of Personal Devices:
   • If employees use personal devices (such as computers, laptops, or smartphones) for work purposes, employers may be required to reimburse a reasonable percentage of the associated costs, such as internet usage or increased utility bills.
3. Communication Expenses:
   • Costs related to work-related communication, such as telephone or internet service, may be considered reimbursable. This is particularly relevant for employees who use their personal phones or internet for work purposes.

Gas Reimbursement in California

1. Business-Related Travel:
   • If an employee is required to use their personal vehicle for business-related travel, such as commuting to a work site, meeting clients, or running work-related errands, the employer may be required to reimburse the employee for the expenses incurred, including gas expenses.
2. Standard Mileage Rate:
   • Employers often use the California labor code standard mileage rate, which is set by the Internal Revenue Service (IRS), as a guideline for gas reimbursement. The standard mileage rate is a standard amount per mile that the IRS sets annually for various business-related uses of a personal vehicle.
3. Actual Business Expenses vs. Standard Mileage Rate:
   • Employers can choose to reimburse based on the actual expenses accrued by the employee (like gas receipts) for business purposes, or by using the standard mileage rate.

California Tool Wage Law

California Tool Wage Law refers to specific provisions under the California Labor Code that dictate whether an employer is responsible for providing tools and equipment necessary for the performance of job duties, or whether an employee can be required to supply their own tools and equipment.

• Requirement for Employers to Provide Tools:
  • Under California Labor Code Section 2802 (above), employers are generally required to provide and maintain the tools and equipment necessary for employees to perform their work.
• Exception for Employees Earning Twice the Minimum Wage:
  • An important exception may exist for employees who earn more than twice the minimum wage. If an employee earns at least twice the state minimum wage, the employer may require the employee to provide their own tools and equipment​.
  • For example, as of 2024, California’s minimum wage is $15.50 per hour, meaning that an employee earning at least $31.00 per hour could be required to provide their own tools, depending on the nature of the job.
• Specific Industry Rules:
  • Certain industries have specific rules regarding tool and equipment provision. For example, in the construction and automotive industries, employers typically must provide all necessary tools, regardless of the employee’s wage level.
• Reimbursement for Employee-Provided Tools:
  • If an employee is required to provide their own tools and equipment, and those tools are necessary for the performance of their job duties, the employer may still be required to reimburse the employee for these expenses under California Labor Code Section 2802.

Do I Have To Pay For My Uniform At Work?

In California, employers are generally required to pay for uniforms that employees are mandated to wear as part of their job duties. This requirement falls under California Labor Code and regulations enforced by the California Department of Industrial Relations.

1. Employer Responsibility:
   • If an employer requires employees to wear a uniform, the employer may be responsible to cover the cost of purchasing and maintaining that uniform. A uniform is defined as clothing that is distinctively marked with the company’s logo, or specific clothing items that an employee would not ordinarily wear outside of work​.
2. Uniform Definition:
   • A uniform could include items with a company logo, specific colors, or styles mandated by the employer that the employee would not reasonably wear outside of work. For example, if a restaurant requires employees to wear a shirt with the company’s logo and a specific type of pants, the employer must pay for both the shirt and pants.
3. Maintenance Costs:
   • In addition to purchasing the uniform, employers are also required to cover the cost of maintaining it. It is reasonable to require employees to maintain uniforms requiring minimal care, such as washing and tumble drying, without reimbursement; however, special care, such as ironing, dry cleaning or separate laundering must be reimbursed.
4. Exceptions:
   • If the required clothing is something that could be considered general attire that an employee would normally wear outside of work (e.g., a plain white shirt or black pants without a company logo), then the employer may not be required to pay for it. However, this is evaluated on a case-by-case basis .
5. Reimbursement Requirement:
   • If the employee is required to pay for a uniform or its maintenance initially, the employer must reimburse the employee for these costs. Failing to do so can result in legal action and penalties.

All job duties performed by workers that contain reimbursement obligations need to legally be paid by employers. Whether it’s pertaining to exempt employees, salaried, those who work remotely, or hourly workers, any necessary expenditures or losses must be recouped. Call Mr. Justice today for a FREE consultation and to get more information at (844) 568-1702.