Unreimbursed Business Expenses, Labor Code Section 2802
California employers must repay employees for the necessary costs of doing their jobs, and that right cannot be waived.
California employers must repay employees for the costs of doing their jobs. Labor Code section 2802 requires reimbursement of all necessary expenditures or losses an employee incurs as a direct consequence of performing their duties or following the employer’s instructions. The obligation cannot be waived, and any agreement that attempts to waive it is void.
What Must Be Reimbursed
- Mileage, fuel, insurance, maintenance, and wear on a personal vehicle used for work
- A reasonable share of a personal cell phone bill when the phone is required for work
- Home internet service, equipment, and supplies for remote or hybrid work
- Required tools, uniforms, and protective equipment
- Software, subscriptions, and licenses the employer requires
- Travel, lodging, meals, and parking on business trips
- Professional licenses, certifications, and continuing education the position requires
Ordinary commuting between home and a regular worksite is not reimbursable. Travel between job sites during the workday is.
Case Results
Remote and Hybrid Work
Courts have applied section 2802 to remote work costs regardless of whether the arrangement was the employee’s preference or the employer’s requirement. In Cochran v. Schwan’s Home Service, the California Court of Appeal held that an employer must reimburse a reasonable percentage of an employee’s personal cell phone bill whenever the phone is required for work, even if the employee is on an unlimited plan and paid nothing extra because of the work use. The same reasoning applies to home internet service and to utilities that increase when an employee works from home.
Stipends and Flat Allowances
An employer may pay a fixed monthly amount instead of processing individual receipts, but the stipend has to cover each employee’s actual costs. An allowance that is adequate for one employee and short for another does not satisfy the statute as to the second employee. Many employers use the current Internal Revenue Service mileage rate as a benchmark for vehicle costs, which is acceptable as long as it covers what the employee actually spends. An employer may also fold reimbursement into salary, but the portion intended as reimbursement must be identified separately.
Common Violations
- No reimbursement policy at all
- Approving only expenses submitted within an unreasonably short window
- Denying claims for costs the employer knew about and permitted
- Paying a stipend that does not cover documented expenses
- Deducting equipment costs, cash shortages, or damages from wages
- Requiring employees to purchase their own tools or supplies
- Retaliating against an employee who submits a reimbursement claim
Documenting a Claim
Receipts, mileage logs, bank and credit card statements, phone bills, and copies of submitted expense reports all support a claim. Employers are required to retain expense reimbursement records for at least three years, so an employee who lacks complete records of their own may still be able to obtain them. Emails and messages showing that a supervisor knew about the expense are often as valuable as the receipt itself.
Filing and Recovery
An employee may file a claim with the Labor Commissioner’s Office or bring an action in court. The deadline is generally three years from the date each expense should have been reimbursed. A claim brought under the Unfair Competition Law may reach back four years.
Recovery includes the unreimbursed amount, interest at ten percent per year, and attorneys’ fees and costs, which the statute treats as part of the loss the employer must cover. Reimbursements still owed when employment ends can also support waiting time penalties, and a pattern of failures across a workforce can support a claim for civil penalties under the Private Attorneys General Act.
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