In California, employers are required to reimburse employees for any expenses the employees pay in performing their job duties or on behalf of the employer. Under California Labor Code Section 2802, an employer must reimburse its employees for all reasonable and necessary expenses or losses the employees incur during their jobs. An employee who has any out-of-pocket costs for necessary business items or activities likely deserves reimbursement from their employer.
Recently, employers have been trying to shift their cost of doing business to their employees. For example, many employees now work remotely, work from home, or work in a home office. All expenses arising from remote work, work from home, or work in a home office are reimbursable expenses under Labor Code Section 2802. These expenses include the cost of internet service, cell or landline service, computer equipment, routers, Wi-Fi, video conferencing equipment, printers, printer supplies like toner and paper, and general office supplies. Many employers also require their employees who are working remotely, working from home, or working in a home office to provide insurance for company property. The cost of insurance is also reimbursable.
Many employers also require their employees to use their personal cell phones for business reasons, such as communicating with customers or responding to company emails or texts. Employees often refer to these policies as “Bring Your Own Device” or “BYOD” policies. Employers are legally required to pay for the portion of cell phone service and equipment costs that are used for work-related communications. If the employer fails to reimburse the employees for those expenses, this may be illegal. Employers may also need to cover mileage costs, marketing expenses, and necessary purchases for home offices.
An employer who fails or refuses to reimburse an employee for reasonable expenses can be held accountable. An employee can file a wage and hour claim against their employer to get compensation for those losses. If you need to file a wage and hour claim, it’s useful to work with an employment attorney who has experience with business expense reimbursement.
All California employees deserve fair and total compensation for their work. Clapp & Lauinger LLP has worked to protect and defend employee rights for 30 years. Our attorneys are proud to serve Carlsbad, San Diego, and the Southern California communities while successfully representing individual employees and class-action claims.
Employers who fail to reimburse their employees for business expenses may do so by accident. However, many employers do this to cut costs, push more expenses onto an employee, and hope that the employee is unaware of their rights. If your employee rights have been violated, the attorneys at Clapp & Lauinger LLP can help you understand your options. We may recommend discussing the situation with your employer, or it may be in your interests to file a claim.
Whether your case can be settled through negotiation or your interests need to be advocated for in court, our attorneys have the experience necessary. Working with an employment attorney provides you with the greatest chance of success. We believe in fighting for your right to complete compensation.
California law defines costs that require employer reimbursement as any losses or costs that are reasonable and necessary for an employee to complete their work. Required training or business trips should be reimbursed. If an employer requires you to use your phone for work-related tasks, the employer is responsible for a percentage of the phone’s costs.
When an employer does not reimburse an employee for those reasonable and necessary costs, they are putting their employee at a significant financial disadvantage and violating their employee rights. The employee has the right to file for full reimbursement for those costs and losses as well as compensation to cover attorney fees and costs.
These are only considered reimbursable expenses if they are reasonable and necessary, so employees are not entitled to reimbursement for unreasonable or unneeded expenses or losses. Even on necessary business trips, frivolous expenses are not automatically reimbursable.
The statute of limitations on unpaid employment reimbursements is 3 years. Once a claim is filed, employees are allowed to recover up to 4 years of unreimbursed business expenses, plus substantial penalties. Current and former employers may be held liable. Although 3 years may seem like a significant time, certain types of claims may have a limitation of only 1 year. Additionally, the sooner you begin a claim, the more likely your attorney can have the time to gather essential evidence and information.
Under the California Labor Code, employees are not able to waive their right to be reimbursed for business expenses. If an employee has signed an agreement that waives that right, it will not be enforceable in court. You can file a claim against your employer for reimbursement, along with attorney’s fees and costs. Additionally, your employer may face civil penalties for making you sign a waiver that is illegal.
Depending on the exact circumstances of the expense, there are several costs that employers are not required to reimburse. A company policy may still allow for reimbursement, but that will rely on the individual company. Expenses that employers are not required to reimburse may include:
To determine whether you should have received reimbursement for certain expenses, discuss your circumstances with an employment attorney.
Under California law, there are some employees who are not eligible for the same reimbursement as other employees. Under the direction of the Industrial Welfare Commission (IWC), most tools and equipment necessary to do a job must be provided or reimbursed by an employer. There are two exceptions to this:
These construction employees may be required to maintain and provide their own tools and equipment that are generally required in their field of work. However, the employer has to provide tools and equipment that are necessary for workplace safety.
The amount an employer reimburses an employee for a business expense depends on the individual expense. If an employee is required to download software to complete their work, the employer would likely have to reimburse the employee for the full price.
However, there are situations where an employer is only responsible for part of the expense reimbursement. Personal cell phones and laptops can be used for both personal and professional needs, meaning that the employer is not responsible for the full cost of the item or continued expenses.
Additionally, an employee may be reimbursed for travel costs or meals, but they may have chosen unreasonably expensive versions of these costs. The employer would only be responsible for what would be considered reasonable and necessary expenses rather than the entire cost.
An employer has to reimburse any employee for mileage when an employee uses their personal vehicle for work-related purposes. When calculating this reimbursement, the employer can pay whatever is reasonable compensation. An employer may use the Internal Revenue Service (IRS) mileage rate to calculate this, but it doesn’t have to. This 2023 mileage rate for businesses is 65.5 cents per mile. If you are asking for reimbursement from a prior year, you would calculate the amount based on the IRS’s lineage amount for that period of time. The IRS also has different mileage rates when vehicles are used for charities, moving purposes, and medical purposes.
However, an employer is not required to use the IRS mileage calculation. They may instead cover the exact actual expenses or provide the employee with a lump sum to cover costs. Actual expenses coverage would require an employee to keep records about:
Whether paid by IRS mileage rates, actual expenses, or lump sum, the reimbursement should cover all the employee’s losses. If any method an employer uses does not cover the costs, the employee can file a claim.
A reimbursement claim has to prove the following elements to be successful:
If you need to file a claim against your employer for their failure to reimburse reasonable work expenses, you need to show the expenses you are owed to get that compensation from the court. An attorney can help you gather important evidence. This may include:
An employment lawyer can determine what other proof is necessary for your claim.
Employers in California are allowed to increase a commission or salary instead of directly reimbursing the employee. However, there must be a clear calculation and understanding of the portion that covers the business expenses. The employee must be able to understand what part of it was reimbursement so they can determine if it covers their expenses.
You can file a wage claim for unreimbursed expenses. While it’s possible to file a claim with California’s Labor Commissioner’s Office without an attorney, the process is simpler with an employment lawyer. An attorney can help you draft the claim, include important information, and prevent mistakes that may delay your claim.
Your claim may be settled through negotiation with your employer or through court litigation. Either method is made less stressful with an attorney. They can represent your interests, advocate for your side of the story, and make it more likely that your case succeeds. When you have an attorney experienced in employment law and business expenses, you can feel confident that your interests are protected. If a negotiated settlement does not cover the compensation you deserve, your attorney can fight for you in court.
Employees are entitled to compensation for the work they do, including reimbursement for expenses that should not be out-of-pocket. Clapp & Lauinger LLP has assisted thousands of employees with their business expense claims over the last 30 years. A business expense claim can cover expenses, attorney fees, and even interest in some cases. If you have a question about business expenses, please contact our team and attorney Marita Lauinger at firstname.lastname@example.org.