California Labor Code Section 2802: Employee Required Reimbursements
Employees have been protected by the California Labor Code Section 2802 since 2016 which states that an employer is responsible for covering any expenses or losses an employee incurs while carrying out their job duties. Let’s look at what is required by the employees as well as ways to control expected reimbursements.
Overview Of CA Labor Code Section 2802 & What It Requires From Employers
California Labor Code Section 2802 requires employers to indemnify, or reimburse, their employees for any expenses or losses they incur as a result of carrying out their job duties, even if those duties involve breaking the law. This means that if an employee incurs any expenses, such as legal fees, while carrying out their job duties, the employer is responsible for covering those expenses. Additionally, if an employee suffers any losses, such as loss of property, as a result of carrying out their job duties, the employer is also responsible for compensating the employee for those losses.
It is important to note that an employer cannot terminate an employee for requesting reimbursement for work-related expenses.If an employer fires an employee for invoking their rights under California Labor Code Section 2802, it could be considered retaliation. Retaliation is illegal under California labor law.
Additionally, the employer may face penalties and fines for violating the labor code, and if proven, the employer may be ordered to reinstate the employee, pay back wages, and provide other forms of relief.
What Business Expenses Are Reimbursable?
California Labor Code Section 2802 requires employers to reimburse their employees for any necessary expenses that are incurred as a direct consequence of the discharge of their duties or obedience to their employer’s directions. Some examples of business expenses that may be reimbursable include:
- Travel Expenses such as transportation, lodging, and meals
- Fees for Attending Conferences
- Training or Education expenses related to the job
- Business Use of a Personal Cell Phone if they are required for the job
- Costs of Work Uniform, safety gear, equipment or tools needed to perform the job
- Expenses Related to Entertaining Business Associates
- Postage for mailing job related pieces
When Do Expenses Qualify For Reimbursements?
It is important for employers to have a clear reimbursement policy in place, outlining which expenses will be reimbursed and how the process works, to avoid disputes and misunderstandings.
It’s worth noting that the reimbursement must be “necessary” and incurred as a direct consequence of the discharge of the employee’s duties. Additionally, California also has a law that requires employers to reimburse employees for any expenses they incur while using their personal cell phone or electronic device for work-related purposes.
What Happens If Employers Fail To Pay?
If employers fail to reimburse their employees for necessary expenses incurred as a direct consequence of their job duties, as required by California Labor Code Section 2802, the employee may file a complaint with the California Labor Commissioner’s office or the Division of Labor Standards Enforcement (DLSE) or can file a lawsuit against the employer for failure to reimburse.
Furthermore, the employer may be subject to penalties and fines for violating the labor code. They may also be ordered by the court to pay the employee for the expenses incurred, as well as any additional penalties or damages that may be awarded.
Salary Increase Rather Than Reimbursing Expenses
According to the California Labor Code Section 2802, the employer is responsible for covering the actual costs of the expenses incurred by the employee.
However, some employers may choose to increase the employee’s salary instead of reimbursing expenses separately. This is known as “wage-expense reimbursement” and it can be a valid way for an employer to comply with the law. By increasing the employee’s salary, the employer is effectively providing the employee with additional compensation to cover the expenses they incurred on the job.
It is important to note that if an employer chooses to use wage-expense reimbursement, the increase in salary must be sufficient to cover the expenses incurred by the employee. Additionally, it is important for the employer to have a clear policy in place outlining the process for wage-expense reimbursement, to avoid disputes and misunderstandings.
It is also worth noting that the employer must keep accurate records of the expenses incurred by the employee and the compensation provided, to ensure compliance with the labor code and for tax purposes.
Should Employers Reimburse Employees Working Remotely?
Regardless of whether the employee is working remotely or in-person, California Labor Code Section 2802 requires employers to reimburse their employees for necessary expenses incurred as a direct consequence of their job duties.
If an employee is working remotely, they may incur expenses such as internet or phone bills, office equipment, or home office expenses. These expenses may be necessary for the employee to perform their job duties and, as such, the employer would be responsible for reimbursing them.
Ways To Control The Expected Reimbursements
There are several ways that an employer can control the expected reimbursements while still complying with California Labor Code Section 2802:
- Establish clear policies and procedures: Employers should have a clear policy in place outlining which expenses will be reimbursed, how the reimbursement process works, and any deadlines or documentation requirements. This can help to prevent misunderstandings and disputes between the employer and employee.
- Implement expense tracking and approval process: Employers can implement an expense tracking and approval process to ensure that all expenses are necessary and incurred as a direct consequence of the employee’s job duties. This can help the employer to identify any expenses that may not be eligible for reimbursement and to ensure that the expenses are reasonable.
- Communicate with employees: Employers should communicate with employees to ensure that they understand what expenses are eligible for reimbursement, how to submit reimbursement requests, and when to expect reimbursement. This can help to prevent employees from incurring unnecessary expenses and can also help to ensure that expenses are submitted in a timely manner.
- Monitor expenses regularly: Employers should monitor expenses regularly to ensure that they are within budget and are necessary. This can help the employer to identify any areas where expenses may be reduced or eliminated.
- Use wage-expense reimbursement: As previously discussed, employers can choose to increase the employee’s salary instead of reimbursing expenses separately. This is known as “wage-expense reimbursement” and it can be a valid way for an employer to comply with the law.
Review Your Company Policies Today With Our Professionals
If your business needs help establishing policies and procedures or implementing a tracking process, we at J.R. Martin & Associates offer assistance to our package clients. Our firm can help you assess your compliance with CA Labor Code 2802. Contact Us Today!
