The California Labor Code requires employers to reimburse employees for certain expenses, but it’s not always clear which expenses should be reimbursed by the employer, and which expenses should be borne by employees. Here’s a list of Five Things to Remember About Employee Reimbursements to help California employers navigate this area of the law.
- Employees Only
Employers do not need to provide reimbursement for expenses incurred by independent contractors. The general reimbursement statute of the California Labor Code is Section 2802. This section reads, in relevant part: “An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer.”
- Generally Useable Wardrobe Items
Many jobs have general dress codes that are not quite uniforms. For instance, if you bus tables in a restaurant, you may be told to wear a white shirt, dark pants, and black slip-resistant shoes. As long as these basic wardrobe items are “usual and generally usable in the occupation,” they are not reimbursable. For instance, in Townley v. BJ’s Restaurants, Inc., a restaurant required its employees to wear black, slip-resistant shoes, but the restaurant did not specify a brand, style, or design, and the employees could wear the shoes outside of work. The court found the shoes were not reimbursable because they were not part of a uniform and were “generally usable in the restaurant occupation.”
- Expenses Must Be Necessary
To be reimbursable, an expense must be necessary to the performance of an employee’s job duties or to comply with the employer’s instructions. According to the California Supreme Court, whether an expense is “necessary” under Section 2802 depends on the reasonableness of the employee’s choices. Questions of necessity are common around the use of cell phones and other technology in the workplace. Take, for example, a sales associate who pulls out her cell phone on the sales floor to look up information for a customer because it is more convenient than using the employer’s computers on the sales floor. If the employer does not require the use of cell phones and provides alternatives, then the employee’s use of her cell phone is likely unnecessary—and not reimbursable—under Section 2802.
- Training and Licensure Expenses
Expenses incurred in connection with training or licenses that are required by law may be passed on to employee. For instance, police officers have been required to reimburse their employers for the cost of peace officer training mandated by law. Licensure expenses are treated the same way. California’s Division of Labor Standards Enforcement has taken the position that employee licenses are not the type of costs that need to be reimbursed under Section 2802 where the licenses are required by a statute or ordinance.
- Unknown Expenses
Generally, expenses are not reimbursable when the employer does not know, or have reason to know, that the employee has incurred the expense. In one California case, an employee claimed that he frequently ran work-related errands in his car, but he was not reimbursed for his mileage. The employee knew that his employer had a policy of reimbursing business-related expenses, yet he did not submit any reimbursement requests. The court granted summary judgment in favor of the employer, because, under the facts of that particular case, the employer did not know or have reason to know the employee incurred those expenses.
Reimbursement issues can depend on the circumstances of a particular workplace. California employers should regularly review their policies and practices to ensure compliance with Labor Code Section 2802.