All right reserved. That includes expenses you might incur while working from home. Mileage reimbursement in California is governed by California Labor Code Section 2802. The Manual is not binding legal authority. ABM Industries, a janitorial service provider, recently agreed to a $5.4 million dollar proposed settlement in Marley Castro, et al. Citing Section 2802, plaintiffs' attorneys have aggressively pursued claims against California employers for failure to reimburse various employee expenses, including home internet and cell phone costs. Gattuso v. If an employee’s duties require the use of the employee’s car, the employee should receive reimbursement for automobile expenses such as mileage, gas, and wear and tear. In this article, we will delve into the intricacies of mileage reimbursement, and demystify the reimbursement laws in California. Don’t forget about other expenses incurred in the “course and scope” of working. A statutory duty generally has a three-year statute of limitations, [See CCP Sec. In making the determination about whether an employee’s actions are in the “course and scope” of their job, courts examine whether the expense being sought by the employee is “not so unusual or startling that it would seem unfair to include loss or expense among other costs of the employer’s business.” Employers need to be mindful about reimbursing employees for cell phone use, printing and office supplies (if employee is required to maintain a home office or use personal printer for work), and other work related expenses. Who is submitting the receipt? The California Labor Law. California Labor Code Section 2802 has landed businesses in costly lawsuits for not properly reimbursing their mobile employees for their business mileage. Section 2804 says that employees cannot “waive” (i.e., forfeit) their right to receive reimbursement for miles driven for work. Whatever the method, the Court stated that the expense plan must reimburse for all costs incurred — even the tax effect of using higher wages to compensate for car expense. © 2020 by The Kaufman Law Firm. The penalty amounts and procedures applicable to “expenses” are set forth in Labor Code Section 1197.1. Under the lump sum method, the employee need not submit any information to the employer about work-required miles driven or automobile expenses incurred. This manual also sets forth the DLSE’s position regarding California’s expense reimbursement laws, including Labor Code, section 2802. California Labor Code Section 2802 obligates employers to reimburse their employees for all expenses incurred during the … The employer merely pays an agreed fixed amount for automobile expense reimbursement. California Labor Code Section 2802 states an employer shall indemnify his/her employee for all necessary expenditures or losses incurred by the employee in the direct consequence of the discharge of his/her duties. It is important to note that while this amount can be negotiated, the employee still is unable to waive their right to reimbursement of their actual costs as mentioned above. 2802. California courts have adjudicated several reimbursement claims. Under California labor law, employers must reimburse employees the entire expense of using … . Mileage reimbursement based on IRS mileage rate is presumed to reimburse employee for all actual expenses. If an employee’s duties require the use of the employee’s car, the employee should receive reimbursement for automobile expenses such as mileage, gas, and wear and tear. Gattuso, at 478. Read this complete California Code, Labor Code - LAB § 2802 on Westlaw FindLaw Codes are provided courtesy of Thomson Reuters Westlaw, the industry-leading online legal research system . If an employer fails to … Attorney Matthew A. Kaufman and the team at The Kaufman Law Firm bring experience and a vast arsenal of legal resources to help clients recover the money they deserve. Subscribe to Labor Code Section 2802. The new Illinois law mirrors key language in California Labor Code Section 2802, California's expense reimbursement law. The law is intended to prevent employers from passing on their operating expenses to their employees. The California Supreme Court also held that the reimbursement rate can be negotiated by parties as long as it fully reimburses the employee, and the amount does not have to be set at the IRS mileage rate. California Labor Code section 2802 requires employers to indemnify their workers for expenses they necessarily incur in their duties. In Gattuso v. Harte-Hanks Shoppers, Inc., the California Supreme Court clarified the parameters of mileage reimbursement under California law, as well as the three different methods available for employers to reimburse employees for their mileage reimbursement. Employers sometimes focus on federal tax-related rules and impose “per diem” expense limits set by the Internal Revenue Service. California Arbitration In Employment Disputes: Don’t Believe The Hype! 5. In addition to paying for travel time, under California Labor Code section 2802, employers are responsible for paying employees’ “necessary” business expenses, including travel-related expenses. California Labor law requires that employees be reimbursed for their work related expenses, such as mileage, supplies, training, tools and equipment and even legal expenses. Can I file a lawsuit to get unpaid travel expenses reimbursed in California? The actual expenses of using an employee’s personal automobile for business purposes include: fuel, maintenance, repairs, insurance, registration, and depreciation. Actual expense method of reimbursement. Employers must tell employees how its formula or method for reimburses for automobile expense; merely stating that wages cover auto expenses is not enough. § 2802 (a) 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, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful. You Have Rights As A Worker. It is a major part of your lifestyle. Necessary expenditures include any attorney fees or costs incurred by employees to recoup … The state of California has the strictest labor laws in the country when it comes to auto allowances and vehicle reimbursements. Expense reimbursement may seem like a small issue in comparison with the other areas of liability facing California employers, but the exposure for not appropriately reimbursing employees can be substantial. The 2017 IRS mileage rate is as follows: If the employee challenges the amount reimbursed, the employee bears the burden to show how the “amount that the employer has paid is less than the actual expenses that the employee has necessarily incurred for work-required automobile use (as calculated using the actual expense method), the employer must make up the difference.” Gattuso, at 479. Your job is more than just a source of income. Under California labor law, employers must reimburse employees the entire expense of using personal automobiles. The Court also warned that employee cannot waive the right to be fully reimbursed for their actual expenses: We agree that, as with other terms and conditions of employment, a mileage rate for automobile expense reimbursement may be a subject of negotiation and agreement between employer and employee. California Employment law requires employers to reimburse employees for all “necessary” expenses they incur while performing their jobs. Costs of doing business in California. The purpose of this statute is "to prevent employers from passing their operating expenses on … This Friday’s Five post discusses five issues employers need to know about automobile and mileage reimbursement under California law. Yes. June 27, 2017. This type of lump sum payment is often labeled as a per diem, car allowance, or gas stipend. Mileage reimbursement issues under California law, Mileage reimbursement considerations under California law, Wage and hour audit considerations for California employers in 2019, Five employment law developments employers need to heed at the start of 2019, 53.5 cents per mile for business miles driven, down from 54 cents for 2016, 17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016, 14 cents per mile driven in service of charitable organizations. Employers do not need to provide reimbursement for expenses incurred by independent contractors. The employer then multiplies the miles driven by a predetermined amount that approximates the per-mile cost of owning and operating an automobile. California Labor Code section 2802 obligates employers to reimburse employees for “all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, …” The Cochran decision posed, and answered, the “threshold question” presented on appeal as follows: It does not specify what amounts are specifically necessary. The latest litigation trends, court decisions, & issues on California Employment Law. California Labor Code § 2802. code: article: section: code: section: ... labor code - lab general provisions. The Court recognized that the mileage rate agreed to between the employer and employee is “merely an approximation of actual expenses” and is less accurate than the actual expense method. In Gattuso, the Court made it clear that employers paying a lump sum amount have the extra burden of separately identifying and documenting the amounts that represent payment for labor performed and the amounts that represent reimbursement for business expenses. This rule, embodied in California Labor Code Section 2802, prohibits employers from shifting their costs of doing business onto the backs of employees. In doing so, the employer can utilize an actual reimbursement, mileage reimbursement, or lump-sum method. Harassment Advice: What Should You Do If You’re Being Harassed? Under the mileage reimbursement method, the employee only needs to keep a record of the number of miles driven for job duties. This important statute reads as follows: 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 . California Labor Code section 2802 requires employers to indemnify their workers for expenses they necessarily incur in their duties. 1. In examining the different methods of reimbursement, the Supreme Court held that the actual expense method is the most accurate, but it is also the most burdensome for both the employer and the employee. Sec. If the plan does not fully compensate for all expenses, the employee can recover the difference. Section 2802 of the California Labor Code requires employers to reimburse their employees for the reasonable and "necessary" expenses they incur in direct consequence of discharging their job duties. Gattuso, at 480. Labor Code Section 2802. California Labor Code section 2802 has been held to cover the following types of necessary expenses: Personal Vehicle Usage: Employers must reimburse employees who use their personal vehicles in completing job duties, typically at the IRS’ standard mileage rate. The California Labor Code – and, consequently, Section 2802 – only … California Labor Code § 2802: Employers Duty to Reimburse California Labor Code section 2802 requires employers to reimburse employees, “for all necessary expenditures or losses incurred by the employee” while completing work duties. If you are not fully compensated for auto or car expenses and need experienced representation by an employment lawyer who will fight passionately for your rights, please contact Mr. Kaufman at 818-990-1999 or email him here. The California Court of Appeal agreed there were violations and held (which means, it’s now the law): “We hold that when employees must use their personal cell phones for work-related calls, Labor Code section 2802 requires the employer to reimburse them. I Will Help Protect Them. Labor Code Section 2802. By Terry O'Connor Labor Code § 2802 requires California employers to reimburse employees for all necessary expenditures incurred in the performance of their duties. Yes. In addition to mileage, employers may also have to reimburse employees for other costs they incurred in driving their personal cars for business. By clicking submit you are agreeing to the. (a) 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, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful. Mileage reimbursement based on IRS mileage rate is presumed to reimburse employee for all actual … Corbett H. Williams Employment Law. division 1. department of industrial relations [50 - 176] division 2. employment regulation and supervision [200 - 2699.5] division 3. employment relations [2700 - 3100] Under the actual expense method, the parties calculate the automobile expenses that the employee actually and necessarily incurred and then the employer separately pays the employee that amount. Reimbursement of Employee Expenses California’s Labor Code Section 2802 normally requires employers to reimburse employees for “reasonable” and “necessary” expenses incurred while performing their job duties. California Disability Discrimination: The ADA and FEHA, FMLA & CFRA: California Leave Rights & Conditions. But it does offer significant information with respect to how the DLSE approaches California’s expense reimbursement laws, even including several factual scenarios. The upshot is that employers can have different expense reimbursement plans, but the plan must reimburse the entire cost of using a personal car on-the-job, including depreciation. 2. . Under section 2804, however, any agreement made by the employee is null and void insofar as it waives the employee’s rights to full expense reimbursement under [Labor Code] section 2802. v. ABM Industries, Inc., a class action involving a California class of over 3,000 cleaning employees who claim that they were not reimbursed under Labor Code section 2802 for the expense of required use of their personal cellphones. The employer must communicate to its workers the method or formula used to reimburses for car expenses. The obligation to reimburse business expenses incurred by employees originates in California Labor Code section 2802, which requires an employer to "indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of … California Labor Code section 2802 requires employers to reimburse their employees for mileage they incur in the course of their employment. Whether your company pays a monthly allowance or the IRS mileage rate, you cannot assume that your program complies with CA Labor Code 2802(a). Types of Expenses The Cochran case expressly extended the expense reimbursement requirement to cover personal cell phone usage where the employer does not otherwise provide the equipment and/or a cellular plan. 335 through 349.5] while the recovery of a penalty generally has a one-year statute of limitations. In Gattuso v. Harte-Hanks Shoppers, Inc., an outside salesperson wanted to recover for driving his personal car to meet clients, and the California Supreme Court held that employers could adopt different types of expense reimbursement plans under California law such as lump sum payments, the IRS Standard Mileage Rate, or higher wages to compensate for auto expenses. . For more detailed codes research information, including annotations and citations, please visit Westlaw . To learn more, contact our Westlake Village or Los Angeles law office today and schedule a free initial consultation to discuss your case. Under California Labor Law, must employers reimburse employees for expenses incurred at work such as auto or mileage expenses? Did you know that California Labor Code Section 2802 requires employers to reimburse employees for any necessary expenses the employees incur while doing their jobs? Section 2802 operates to prevent an employer from passing its operating expenses to employees. In general, employers must reimburse the cost of uniforms, travel expenses, tools and equipment required for the job. If you have been the victim of wrongful termination, wrongful demotion or any kind of discriminatory business practices, it is time to take action and contact a Ventura employment law attorney that can help. Overtime Pay Laws in California & Exemption Laws. An employer’s obligation under Labor Code section 2802 requires it to compensate an employee for all expenses actually and necessarily incurred. In fact, employees throughout California may be owed significant compensation for basic work-from-home expenses. The code ensures that “ An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of … California Labor Code section 2802 has been around for a long time (since 1937, to be exact). The IRS publishes standard mileage rates each year (and sometimes adjusts these rates during the year). 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