California Employee Expense Reimbursement Lawsuit

California Employees Must Receive Reimbursement for Mandatory Business Expenses

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.

Reimbursable Business Expenses

A California employee must receive reimbursement for any mandatory business expense.  Typically, employers provide reimbursement where employees are required to use personal vehicles for company business, use personal cell phones for work calls, web usage, emailing, or messaging, and while working from home and using home utilities, such as internet, heat, and electricity.  Reimbursement is also generally required where a California employee must purchase supplies or inventory for the employer.  Although hopefully not a common request, California employees may request reimbursement for personal property stolen from the employer’s premises.

California Employee Rate of Reimbursement

Under California law, reimbursement rates must be reasonable.  California Labor Code § 2802(c).  At the same time, the employee must receive full reimbursement for expenses incurred.  Where the expense is supported by a fixed cost, such as a receipt or invoice, there is little room to dispute what constitutes a reasonable reimbursement.  Where the requested reimbursement includes expenses whose dollar value may be difficult to ascertain, a dispute may arise over the amount of reimbursement.  Where an employee can show that the reimbursement amount is less than their actual expenses incurred, the employer will be required to make up the difference. Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal. 4th 554, 569 (2007).  The Gattusoopinion demonstrates that, under certain circumstances, a California employee may have a claim for additional reimbursement, provided they can show that the employer’s reimbursement is not reasonable because it is insufficient.

In lieu of direct reimbursement, California employees may receive enhanced compensation to cover mandatory business expenses.  Click here to learn more about mandatory business expense enhanced compensation for California employees under California Labor Code section 2802.

Common California Employee Reimbursement Claims

California courts routinely award damages where an employer fails to pay for an employee’s mandatory business expenses.  California Labor Code section 2802 has been found to cover the following types of mandatory 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 (9^th 2015); Cal. Code Regs. Tit. 8, § 11050(9)(A).

California Employees Cannot Waive Their Right to Reimbursement

Waivers against a California employee’s right to reimbursement under Labor Code section 2802 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 LLP at 630.

Extreme Cases May Support Wrongful Constructive Termination Claim

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 and emotional distress damages.

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).  Although possible, these claims are rare, legally technical, and usually only viable in uniquely extreme cases.  Please contact an attorney for assistance before pursuing this claim.

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.

California Employees May Recover Damages for 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.  Michael 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.