Failure to Reimburse Expenses - Brightwood Law Group, PC

Unreimbursed Business Expenses in California: Your Right to Reimbursement Under Labor Code § 2802)

Introduction: You Shouldn’t Pay to Work for Your Employer

As an employee in California, you should not have to bear the financial burden of your employer’s business costs. California law is clear: employers must reimburse their employees for all necessary expenditures or losses incurred directly as a consequence of performing their job duties. If your employer is requiring you to pay for business-related expenses out of your own pocket without reimbursement, they may be violating the law.

At Brightwood Law Group, PC, we help employees recover unlawfully withheld reimbursements for business expenses. This page explains your rights under California Labor Code § 2802 and what steps you can take if your employer fails to meet their obligations.

Understanding Your Right to Expense Reimbursement (Labor Code § 2802)

California Labor Code § 2802(a) states: “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...”

Key aspects of this law include:

“Necessary Expenditures or Losses”: This is a broad term covering all reasonable costs that an employee incurs to perform their job tasks or as a direct result of their employment. The expense must be something that was required or necessary for the job.
“Direct Consequence of the Discharge of Duties”: There must be a clear link between the expense and your job responsibilities or your employer’s instructions.
Employer’s Knowledge (Implied): While not always explicitly stated as a prerequisite for every expense, generally, the employer must know or have reason to know that the employee is incurring these necessary expenses.

This law ensures that an employee’s take-home pay is not effectively reduced by forcing them to cover business operational costs.

Common Types of Reimbursable Business Expenses in California

Under Labor Code § 2802, employers must typically reimburse employees for a variety of work-related costs, including but not limited to:

Mileage and Vehicle Use: If you use your personal vehicle for work-related travel (beyond your normal commute), your employer must reimburse you for the costs incurred. This is often calculated using the IRS standard mileage rate, but other reasonable methods can be used if they fully cover your actual expenses (gas, wear and tear, maintenance, insurance).
Cell Phone Usage: If you are required to use your personal cell phone for work-related calls, texts, or data, your employer must reimburse you for a reasonable percentage of your cell phone bill that reflects your business use.
Home Office Expenses: If your employer requires you to work from home or if it’s a condition of your employment, they may be obligated to reimburse you for a reasonable portion of necessary expenses like internet access, office supplies, and potentially even a portion of your utility bills that are directly attributable to your work.
Uniforms and Protective Gear: If your employer requires you to wear a specific uniform (that isn’t general street clothing) or specialized protective gear, they must typically pay for it or reimburse you for its cost.
Tools and Equipment: If specific tools or equipment are necessary to perform your job and are not customarily provided by employees in your trade, your employer should generally provide them or reimburse you for their purchase.
Travel Expenses: Costs associated with business travel, such as airfare, train tickets, lodging, meals (within reasonable limits), and other travel-related incidentals.
Training and Education Costs: If your employer requires you to attend specific training sessions, seminars, or obtain certifications to perform your job or maintain your employment, they must typically cover these costs.
Professional License or Membership Fees: If maintaining a professional license or membership is a requirement of your job imposed by your employer.

What is NOT Typically Reimbursable by Employers?

The Labor Code does not require reimbursement for:

Ordinary Commuting Costs: The cost of travel from your home to your regular place of work and back is typically not a reimbursable business expense.
Purely Personal Expenses: Expenses that are not directly related to your job duties or incurred for personal benefit.
Lavish or Unreasonable Expenses: Employers are only required to reimburse for “necessary” and reasonable expenses. Extravagant or unnecessary costs may not be fully reimbursable.

Employer Obligations and Employee Responsibilities Regarding Expenses

Employer’s Duty: The primary duty is to indemnify (reimburse) employees for all necessary business expenses. While not strictly mandated by § 2802, it is best practice for employers to have a clear expense reimbursement policy and a straightforward process for employees to submit expenses.
Employee’s Responsibility: Employees generally have a responsibility to provide documentation (such as receipts, mileage logs, or itemized bills) to substantiate their expenses. If exact records are impossible for certain minor expenses, a reasonable estimate may suffice. Employees should also follow any reasonable company policies for reporting expenses in a timely manner.

Consequences of an Employer’s Failure to Reimburse Necessary Expenses

When an employer fails to reimburse an employee for necessary business expenses as required by Labor Code § 2802, it can have several legal consequences:

Unpaid Wages: Unreimbursed business expenses are often treated like unpaid wages, as they effectively reduce the employee’s actual earnings.
Interest: Employees may be entitled to pre-judgment interest on the unreimbursed amounts.
Attorney’s Fees and Costs: A significant protection under Labor Code § 2802© is that an employee who prevails in a lawsuit to recover unreimbursed necessary business expenditures is entitled to an award of their reasonable attorney’s fees and litigation costs. This provision helps employees enforce their right to reimbursement.

What to Do If Your Employer Fails to Reimburse Your Business Expenses

If you have incurred necessary business expenses and your employer has not reimbursed you:

Keep Detailed Records: Maintain meticulous records of all expenses incurred, including dates, amounts, the business purpose, and copies of all receipts, invoices, and mileage logs.
Follow Company Policy: Ensure you have submitted your expense reports according to your employer’s established procedures. Keep copies of everything you submit.
Communicate in Writing: If your reimbursement is denied or unreasonably delayed, make a polite but firm written request to your supervisor or Human Resources department. Outline the expenses, reference company policy if applicable, and mention your rights under California Labor Code § 2802.
File a Wage Claim or Lawsuit: If your employer still refuses to reimburse you, you can file a wage claim with the California Labor Commissioner’s Office (DLSE), as unreimbursed expenses can be considered unpaid wages. Alternatively, you can file a lawsuit in court.
Consult Brightwood Law Group, PC: An attorney can advise you on the strength of your claim, help you calculate the full amount owed (including potential interest and penalties), and represent you in seeking recovery.

How Brightwood Law Group, PC Can Help You Recover Unreimbursed Expenses

Here at Brightwood Law Group, PC, we are committed to ensuring that employees are not forced to subsidize their employers’ business operations. We have experience helping employees recover unreimbursed business expenses. Our services include:

Analyzing Your Expense Records: We will review your documentation to determine which expenses are likely reimbursable under California law.
Advising You on Your Rights: We will explain your employer’s obligations and your rights to reimbursement.
Drafting Demand Letters: We can send a formal demand to your employer for payment of all outstanding reimbursements.
Representing You in Claims and Litigation: We can represent you in claims filed with the Labor Commissioner or in civil lawsuits to recover your expenses with interest.

Failure to reimburse expenses can impact your overall compensation. Learn more on our general California Wage and Hour Laws Page

Don’t Pay for Your Employer’s Business Costs. Get Reimbursed for Your Business Expenses.

If your employer has failed to reimburse you for necessary business expenses you incurred while performing your job duties, you have the right to recover those costs. Contact Brightwood Law Group, PC today for a confidential consultation. Our dedicated employment law attorneys are here to help you enforce your rights under California Labor Code § 2802. Call us at (310) 895-9075 or fill out our online contact form.