Failure to Reimburse for Business Related Expenses
California Labor Code section 2802 obligates employers to reimburse their employees for all necessary expenses incurred in the course and scope of their employment. This means California employees have a right to be reimbursed for their work related expenses, such as equipment, materials, training, business travel, uniforms, and even legal expenses. Section 2802’s sister statute, Section 2804 prohibits employers from waiving an employee’s reimbursement rights under section 2802, and prevents employees from willingly forfeiting these rights.
Mileage Reimbursement-Employee’s Vehicle
Any time an employee uses his or her own vehicle for business purposes, including running an errand for business reasons, the employee has incurred expenses. The expenses take the form of fuel and wear and tear on the vehicle. DLSE provides two options for employers reimbursing employees for the business-related use of their personal vehicles: the employers can reimburse employees based on either (1) the IRS mileage rate (51 cents per mile as of January 1, 2011) or (2) the actual costs associated with the business-related expense.However, these two means of reimbursement are not the exclusive methods. Any method that fully reimburses employees for actual expenses is acceptable.
If the employer elects to reimburse the employees based on the actual costs at a rate less than the IRS mileage rate, the employer bears the burden of proving that the rate is reasonable based on the total vehicle expenses incurred during the preceding year.
Tools and Equipment
The law regarding reimbursement of tools and equipment is clear. The Industrial Welfare Commission’s wage orders require employers to furnish all tools and equipment necessary to do the job. There is a narrow exception to this requirement. Employers may require employees to supply their own hand tools (1) if the employees earn at least twice minimum wage, and (2) the hand tools are customarily required in the trade.
If an employer requires employees to wear a uniform, the employer must purchase the uniform and pay for maintenance and cleaning of the uniform. The term uniform is broad and includes wearing apparel of distinctive design or color. The term distinctive design covers traditional uniforms such as one worn by law enforcement officers. However, the DLSE has stated that distinctive design also includes rugby shirts and floral Hawaiian-style shirts.
The definition of uniform also includes clothing of a particular color even if the clothes do not have an insignia or are not of a particular design. For example, if the employer requires workers to wear a black shirt, even one without an insignia, the employer must pay for it because it is of distinctive color.
Mileage reimbursements must be made when wages are paid or at least once per calendar month, as determined by the employer. Any payment must be made no later than the end of the calendar month following the month in which the expenses were incurred. Any payment processed on an employee’s normal payroll check must reflect the reimbursement amount separately. Employers may not take any deductions from the reimbursement amount.
The employee’s reimbursement payment must include an itemized statement of the computation of the mileage reimbursement, including the beginning and end of the reimbursement time period, the rate of reimbursement, and the number of miles being reimbursed. Employers may, as an alternative, provide copies of the reimbursement requests that identify any changes in the requested reimbursement.
Employers that provide employees with vehicles for business-related purposes must reimburse the employees for all business-related expenses incurred with regard to the vehicles. Gas, oil, lease or purchase payments, garage rent, repairs, tires, vehicle depreciation and additional, required insurance are among the expenses to be reimbursed. Employers must maintain all records in connection with employee’s requests for expense reimbursements for a period of three years.
Business Related Travel
Employers must reimburse an employee for the purchase of meals, lodging, and other incidental expenses when the employer requires the employee to travel away from home on business. For meals and lodging, the employer has the option of reimbursing the actual costs or providing the employee with a per diem rate equivalent to the standard IRS per diem rate for the location of travel. If the employer chooses to use the IRS per diem rate, it must make the employee aware of this policy before the business travel. Failure to do so will result in the employer being required to reimburse the employee for the actual costs, even if greater than the IRS per diem rate. Tips and other incidental travel expenses must also be reimbursed.
If you have any questions about whether the expenses that you are paying at work out of your own pocket should be reimbursed, contact Steven Miller. He has the experience, legal knowledge, and a winning track record representing employees against top attorneys appearing for some California’s largest employers that failed to reimburse their employees for necessary expenses needed to perform their job.