Employee Reimbursement for Business Expenses in California Reexamined

Employee reimbursement regardingbusiness expenses is on the forefront of many workers’ minds these days. This year, with a pandemic causing a dramatic change to business operations, many employers were forced to transition some, or all, of their workers to work remotely. Even though companies may have made an initial attempt to ensure their employees had the necessary technology to make the transition as seamless as possible, this is uncharted territory for many businesses and employees alike, and its important to make sure these overnight changes aren’t burning an unnecessary hole in your pocket during these challenging times. The state of California, which already has an established employee reimbursement policy in their labor code, urges employees to take a deeper look at their rights during this time. As an employee in this state that is either encouraged or required to work from home, you may be entitled to employee reimbursement. Further, as with a number of other employee rights issues, it is expected that other states will soon follow California’s lead. 

What Does the Law Say?

The code (California Labor Code § 2802) requires employers to reimburse its employees “for all necessary expenditures or losses” at reasonable costs incurred by the employee while performing job duties. For a business expense to be considered a reimbursement claim, the employee must be able to show the following: (1) They have incurred a necessary expense; (2) While completing their job duties; (3) Their employer knew or had reason to know it would be an expense; and, (4) The employer did not take the reasonable steps towards reimbursement.  

As an employee, it’s not enough to say, “I have an incurred an expense.” The expense must be integral to completing your job function. For example, you would not be able to expense a printer, ink, or paper costs if you are allowed/ given access to print at work and you are printing for convenience rather than necessity. Additionally, commuting costs to and from work are also left out of the reimbursement scope since it is not incurred while you are completing your job duties. Finally, you must notify and request the reimbursement from your employer in order to give them the opportunity to work towards the reimbursement. If, for example, your employer requests you to use your vehicle for business, they may intuitively know there will be an expense, however, not all costs are apparent. For this reason, you should notify your employer that you are incurring necessary costs while on the job and request reimbursement.

What Can be Considered a Valid Reimbursement Claim in California? 

Some employee reimbursement claims that have been deemed a necessary expense by the California courts include:

  1. Use of Personal Vehicles: Employees must be reimbursed, typically at the IRS’ standard mileage rate, for use of their personal vehicles when completing job related duties.
  2. Use of Personal Cell Phone: Employees must be reimbursed for the mandatory use of their personal cell phones for job related business.
  3. Use of Personal Computer: Employees must be reimbursed for the use of their personal computer if the employer fails to provide one when deemed necessary to complete their job function.
  4. Employee Uniforms & Protective Apparel: Employees must be reimbursed for work uniforms or apparel that qualifies as required protective gear.

Workers in California can also have legal fees or judgements for job-related conduct lawsuits reimbursed, as well as recompense for personal property stolen from the employer’s premises.  Additionally, an employer cannot have you waive your rights to reimbursement. If any such agreement was previously made, it is deemed void by the California Labor code.

What am I Entitled to Recover When Seeking Reimbursement?

If you have been required to use personal property to complete mandatory job duties, and your employer has failed to provide reimbursement, you are eligible to recover the cost incurred, interest, and attorney’s fees sustained while trying to achieve reimbursement. If you’ve found yourself having to quit due to the financial strain of unpaid reimbursement you may have a claim for a wrongful constructive termination. This is usually the case when the failure to reimburse causes the employees’ compensation to fall below the minimum wage and the employee is left with no option but to quit. Under this circumstance, the employee would also be entitled to damages which would include loss of income.

There is a lot of room for interpretation here regarding what else constitutes a valid reimbursement claim as well as how much of it can be recovered, so feel free to speak to our firm, Fitapelli & Schaffer, LLP, for a free consultation to see if you may have a claim. Just because your employer may be new to remote work, it doesn’t mean you have to foot the bill for expenses necessary to complete your work from home. Additionally, if you’re already back to work or have experienced any of these issues pre-pandemic, you may still be entitled to recover these expenses not only in California, but in many states across the country. Call us now at (212) 300-0375 or visit our website for more information.