Workers in California have a broad right to reimbursement for work expenses. Reimbursable expenses can include mileage for use of the worker’s motor vehicle in the discharge of the employee’s duties, as well as parking, hotel, restaurant, and airfare charges.
Originally enacted in 1937, California Labor Code section 2802 mandates that “An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by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, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful."
“[T]he broad purpose of Labor Code section 2802 is to require an employer to bear all of the costs inherent in conducting its business and to indemnify employees from costs incurred in the discharge of their duties for the employer's benefit.” In re Acknowledgment Cases (2015) 239 Cal.App.4th 1498, 1506. The statute aims to protect California workers by preventing “employers from passing their operating expenses on to their employees.” Gattuso v. Harte-Hanks Shoppers, Inc. (2007) 42 Cal.4th 554, 562. Any contract or agreement between an employer and employee waiving the employee’s right to reimbursement for work expenses is invalid. California Labor Code section 2804.
There are two key elements to this statute. First, the employee shall be reimbursed only for "necessary expenditures." These shall include "all reasonable costs, including, but not limited to, attorney's fees incurred by the employee enforcing the rights granted by this section.” California Labor Code section 2802(c). For instance, an employee is required to have a power drill to carry out the duties of his employment and the employer does not supply one. If the employee buys a set of power equipment that comes with other tools besides the drill, then the accompanying tools might not be recognized by a court as a reimbursable expense under the statute. However, the employee would still be entitled to reimbursement for the drill, because the job required use of a drill and the employer did not provide one.
Secondly, the expenditures must be in "direct consequence of the discharge of his or her duties." California Labor Code section 2802(a). A common example of a work expense in today's work environment is a phone bill. Some workers may be required to bring a cellular phone with them as they work in order to contact the business, clients, or other people associated with the performance of his or her job, when necessary. Often, an employee will not realize that these phone calls are inflating the rate of his or her phone bill. However, if the calls are necessary for the discharge of his or her duties and the calls affect the phone bill amount, then the employee is entitled under the law to reimbursement for each occasion where the employee used the employee’s personal phone for work. See Cochran v. Schwan’s Home Service, Inc. (2014) 228 Cal.App.4th 1137.
Similarly, an employee required to drive his vehicle in order to perform his work duties would also be entitled to reimbursement for fuel expenses directly attributable to his work-related travel.
Employer-Required Educational Program or Training“Section 2802 applies to any expense or cost of any employer-provided or employer-required educational program or training for an employee providing direct patient care or an applicant for direct patient care employment. Those expenses or costs shall constitute a necessary expenditure or loss incurred by the employee in direct consequence of the discharge of the employee’s duties, as that phrase is used in Section 2802.” California Labor Code section 2802.1.
Claims for Failure to Reimburse Work ExpensesThe elements of a failure to reimburse claim are:
USS-POSCO Indus. v. Case (2016) 244 Cal.App.4th 197, 205; Cochran v. Schwan’s Home Service, Inc. (2014) 228 Cal.App.4th 1137, 1140-1141.
An employee who successfully brings a claim for failure to reimburse work expenses is entitled to interest and costs, including attorney's fees under California Labor Code section 2802(c). The rationale for the entitlement to costs and attorney’s fees is that without the right to recover attorney fees a California Labor Code section 2802 claim would essentially be useless to employees, as the cost of hiring a lawyer to enforce their rights could very well be greater than the unreimbursed expenses they are trying to recover. Thus, employers who did not wish to reimburse work expenses could simply refuse to reimburse those expenses, knowing employees were unlikely to take action given that it might cost the employee more to enforce his rights under the statute than the amount the employee could recover.
Note: An employer may not be vicariously liable or obligated to reimburse expenses if the conduct that gave rise to the expense substantially deviates from the employee’s “course of duty so as to amount to a complete departure.” Jacobus v. Krambo Corp. (2000) 78 Cal.App.4th 1096, 1101-1102.
Mileage ReimbursementEmployees are entitled to mileage reimbursement, even if the employer pays enhanced wages aimed at covering that expense. However, an enhanced wage scheme may be proper if the employer provides a means of distinguishing the amount being paid for labor performed from the amount being paid as reimbursement for work expenses. Espejo v. The Copley Press, Inc. (2017) 13 Cal.App.5th 329.
Traffic and Parking TicketsSpeeding and parking tickets are not reimbursable as work expenses under California Labor Code section 2802, as the statute does not entertain reimbursement for expenses arising from conduct that is unlawful and that the employee believes is unlawful. Villalpando v. Exel Direct Inc. (2016) 161 F.Supp.3d 873.
Independent ContractorsIndependent contractors are generally engaged to do specific jobs and cannot be fired before the job is complete unless they violate the terms of the contract between the parties. Workers who under California law are independent contractors are not employees and thus they are not entitled to reimbursement of work expenses under California Labor Code section 2802. Arnold v. Mutual of Omaha Ins. Co. (2011) 202 Cal.App.4th 580.
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