Please click here to read Astanehe Law’s California Labor Code § 2802 Employee Expense Reimbursement 2021 Update.

California law operates to ensure employers provide employees with the equipment and resources necessary to work and protect employees by preventing employers from passing operating expenses on to employees.  To that end, the Labor Code mandates that California employers reimburse employees for mandatory expenses incurred in performing job duties.  Employers that fail to reimburse employees violate California law, and face exposure for their failure to reimburse under California Labor Code section 2802.

California Labor Code § 2802: Employers’ Duty to Reimburse

California Labor Code section 2802 requires employers to reimburse employees, “for all necessary expenditures or losses incurred by the employee” while completing work duties. California Labor Code § 2802. Necessary expenditures or losses include all reasonable costs.  Id.

Labor Code § 2802 Reimbursement Claim Elements

To prevail on a failure to reimburse claim, California employees must show:

  1. They incurred necessary expenditures;
  2. While in the discharge of their job duties;
  3. The employer knew or had reason to know of the expenditures; and,
  4. The employer did not exercise due diligence towards reimbursement.  Cochran v. Schwan’s Home Services, Inc., 228 Cal. App. 4th 1137 (2014).

Under California Labor Code section 2802, asserting the existence of an expense is insufficient. Instead, the expenditure must be necessary.  For example, an employee that prints business documents from their home office for convivence, rather than necessity, is not entitled to reimbursement.  The use of their personal printer is not necessary if the employer provides printers at the office.  Thus, the employer has no duty to reimburse for printer-related costs.

Reimbursement is limited to expenses incurred while the employee discharge’s job duties.  Accordingly, commuting to and from work is not covered by Labor Code section 2802.

The employer must know or have reason to know of the expenditures.  Often, the employer has constructive knowledge of certain expenses, and the employer may still recover under section 2802 despite failing to request reimbursement. For example, when the employer requires an employee to use their personal vehicle for business, the employer is deemed to have reason to know of the expenditure.  However, not all costs are apparent.  Thus, employees must inform the employer that they are incurring necessary costs while working and request reimbursement.

Common California Employee Reimbursement Claims

California courts have adjudicated several reimbursement claims.  California Labor Code section 2802 has been held to cover the following types of necessary expenses:

  1. Personal Vehicle Usage: Employers must reimburse employees who use their personal vehicles in completing job duties, typically at the IRS’ standard mileage rate. Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal. 4th 554 (2007).
  2. Personal Cell Phone Usage: Employers must reimburse employees for the mandatory usage of personal cell phones for company business. Cochran v. Schwan’s Home Services, Inc., 228 Cal. App. 4th 1137 (2014);
  3. Legal Fees: Employees named in a lawsuit based on job-related conduct must be reimbursed for incurred defense fees. Plancarte v. Guardsmark, 118 Cal. App. 4th 640 (2004);
  4. Stolen Personal Property: Employers must reimburse employees for personal property stolen from the employer’s premises. Machinists Automotive Trades Dist. Lodge v. Utility Trailers Sales Co., 141 Cal. App. 3d 80 (1983);
  5. Personal Computer Usage: Where the employer fails to provide a computer when necessary to accomplish job duties, the employee must be reimbursed for the use of their personal computer;
  6. Legal Judgments: Employers are required to reimburse employees for any legal judgments entered against them for conduct arising out of their employment. Jacobus v. Krambo Corp., 78 Cal. App. 4th 1096 (2000).
  7. Employee Uniforms & Cal-OSHA/OSHA Protective Apparel: Under California law, employees must be reimbursed for uniforms or clothing qualified as protective apparel as regulated by Cal-OSHA or OSHA.  Lemus v. Denny’s Inc., 617 Fed. Appx. 701, 703 (9th 2015); Cal. Code Regs. Tit. 8, § 11050(9)(A).

Employees Cannot Waive Their Right to Reimbursement

California courts have held that waiving the right to Labor Code section 2802 reimbursement is against public policy.  Edwards v. Arthur Anderson LLP, 44 Cal. 4th 937, 951 (2008).  Thus, any agreement made by an employee to waive their right to reimbursement is void. California Labor Code § 2804.  In finding reimbursement waivers void, courts hold a private agreement cannot contravene California’s strong public policy favoring employee reimbursement.  Edwards v. Arthur Anderson LLPat 630.

Constructive Termination Due to Failure to Reimburse

Employees are wrongfully constructively terminated when working conditions become so intolerable that they have no option but to resign.  Turner v. Anheuser-Busch, Inc., 7 Cal. 4th 1238 (1994).  Under these circumstances, the employee is entitled to damages, including loss of income.

Ordinarily, failure to reimburse claims do not create intolerable working conditions necessary to sustain a wrongful constructive termination claim.  However, a wrongful constructive termination claim based on an employer’s failure to reimburse endures where the failure to reimburse renders employee compensation below minimum wage, and the employee’s livelihood is jeopardized.  Vasquez v. Franklin Management Real Estate Fund, Inc., 222 Cal. App. 4th 819 (2013).

Here, the constructive discharge claim is borne out of the employer’s failure to reimburse, but rather, the employer’s failure to compensate the employee at minimum wage.  Id. It is supported by California’s clear public policy favoring the payment of minimum wages.  California Labor Code § 1194.

Damages for California Employer’s Failure to Reimburse

An employee forced to use personal property for mandatory business-related activities is entitled to reimbursement.  Where the employer fails to provide reimbursement, the employee may recover the amount owed, interest, and attorney fees incurred by the employee enforcing their right to reimbursement.  California Labor Code § 2802.  Where the employer’s failure to reimburse supports a wrongful constructive termination claim, the employee is entitled to recover loss of income and benefits. Vasquez v. Franklin Management Real Estate Fund, Inc., 222 Cal. App. 4th 819 (2013).

Astanehe Law Knows Employee Rights

Astanehe Law has experience handling California failure to reimburse claims.  Mr. Astanehe has recovered millions on behalf of Californians.  If your employer has failed to reimburse you for mandatory business expenses, contact Astanehe Law.  Our California employment law attorneys can discuss your options with you and help you learn your rights.  Contact Astanehe Law to discuss your options with an experienced California employment law attorney.