A Refresher on California Reimbursement Requirements in a COVID-19 World, Part Five of the COVID-19 Roadmap Series: Ensuring a Safe Workplace - COVID-19 Screening and Testing, Part Two of the COVID-19 Roadmap Series: Creating a COVID-19 Operations Infrastructure. Receipts are no different. However, Section 2802 only requires reimbursement for “necessary” and “reasonable” costs incurred by the employee as a condition of continued employment. The law is intended to prevent employers from passing on their operating expenses to their employees. The purpose of this statute is "to prevent employers from passing their operating expenses on to their employees." var pday = moment(myDate).format("MMMM DD, YYYY"); The purpose of this statute is "to prevent employers from passing their operating expenses on … With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. While the law is unclear and risk remains, it may be acceptable to reimburse home-bound employees only for a reasonable percentage of their home internet expenses, not the entire bill. In California, an employee is entitled to be reimbursed by his or her employer “for all the necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties…” When working from home, if not normally part of the job, certain expenditures may be entitled to re-imbursement by the employer. What does the reimbursement look like? In fact, employees throughout California may be owed significant compensation for basic work-from-home expenses. the employee chose to work remotely). California Labor Code Section 2802 obligates employers to reimburse their employees for all expenses incurred during the discharge of their duty. | California Labor Code section 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, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful." How much reimbursement is enough? California Labor Code § 2802 (“Section 2802”) requires employers to reimburse California employees for “ all necessary business expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties. Legalweek(year) will bring together thousands of legal professionals for a series of 5 innovative virtual legal events. Each attorney is granted unlimited access to high quality, on-demand premium content from well-respected faculty in the legal industry along with administrative access to easily manage CLE for the entire team. Micha also performs management training for employers. Legal Compass includes access to our exclusive industry reports, combining the unmatched expertise of our analyst team with ALM’s deep bench of proprietary information to provide insights that can’t be found anywhere else. var pday = moment(myDate).format("MMMM DD, YYYY"); | (b) All awards made by a court or by the Division of Labor Standards Enforcement for reimbursement of necessary expenditures under this section shall carry inte… “The Court concludes that a fair interpretation of [Labor Code] §§ 2802 and 2804 which produces “practical and workable results,” consistent with the public policy underlying those sections, focuses not on whether an employee makes a request for reimbursement but rather on whether the employer either knows or has reason to know that the employee has incurred a reimbursable expense. … REIMBURSEMENT OF EXPENSES Employers must reimburse employees for losses and reasonable expenses incurred in the performance of the employee’s job duties. Is there a cutoff date to submit reimbursements? 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. The California Labor Law. 8. However, this general rule has a multitude of nuances once one examines all the different costs that arise in the employment context and the various Labor Code and … employee. While a court ultimately may agree that the amount was unreasonable, the language of Section 2802 requires reimbursement of all necessary expenses. As stated above, an employer must reimburse an employee for 100 percent of any “necessary expenses,” which California law defines as for the … Courts differ on whether notice to the employer is required to establish liability for a Section 2802 claim. Further, employers cannot contract around their Section 2802 reimbursement obligations. California Employment law requires employers to reimburse employees for all “necessary” expenses they incur while performing their jobs. var myDate = new Date(parseInt(1605031834000)); The best practice is to provide reimbursement within the next pay period following submission. She could, however, submit reimbursements for work-specific programs she was required to install on the device in order to fulfill her job duties. Congratulations to the Newest 2020 Lawyers of Distinction. Convenience, by itself, is insufficient to trigger a reimbursement obligation. What can I do to control the anticipated reimbursements? The cost of the premium account would be reimbursable under Section 2802 as employers cannot pass their operating costs to their employees. 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. While an employer has no obligation to reimburse for basic, non-uniform wardrobe items, the employer’s specific actions and expectations could give rise to a “necessary” business reimbursement. 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. 30 days after incurring the cost) in the written reimbursement policy. Because working remotely was not required, many employers could decline “work from home” reimbursements because the employee’s expenses were voluntary (i.e. [1] But what if an employee’s work-related activities do not actually generate any expense in addition to that which the employee would have normally incurred otherwise? A statutory duty generally has a three-year statute of limitations, [See CCP Sec. The total number of J.D. Effective communication with employees is critical: © 2020 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. Whatever method the employer chooses, make sure the reimbursement is timely to avoid falling afoul of other wage and hour laws. 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. Reimbursement policies should require advance written authorization for purchases over a certain amount. To determine whether (and what) the employer is obligated to pay, there are several factors to consider: The California Labor Code – and, consequently, Section 2802 – only applies to employees. If a California employer requires an employee to drive on official company business, it must either provide the employee with a vehicle, for which all expenses are covered, or reimburse the employee for the cost of driving. However, an employer should only be responsible for a reasonable percentage of that bill. 5. The same rationale applies to a personal cell phone or internet – if an employee must now use their personal cell phone or home internet for work (having no employer-paid alternative), a conservative approach would be to recognize the employer’s responsibility to reimburse for a reasonable percentage of the bill. (Labor Code sections 400–410.) $("#sub2").append( pday ); California Labor Code § 2802. A conservative approach is to treat the duty to reimburse as separate from any notice requirement. 10. Reimbursement requests also could, conceivably, take the form of a screenshot from mobile payment services or electronic transfer platforms. What are your obligations as an employer? California Labor Code Section 2802 obligates employers to reimburse their employees for all expenses incurred during the discharge of their duty. The code states that the penalty for not reimbursing an employee includes: Costs incurred in obtaining reimbursement; Liability for expenses, plus interest; Attorney fees In this first installment in a two-part series, the authors, two lawyers at Williams & Connolly, consider California's new cybersecurity statute; new rulings on key issues; and available defenses at the motion to dismiss stage in class actions stemming from the COVID-19 pandemic. Not a Lexis Advance® Subscriber? 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 . California has the strictest business reimbursement labor code in the country. Our Compliance bundles are curated by CLE Counselors and include current legal topics and challenges within the industry. When an employer violates the California Labor Code, the California Labor Commissioner’s Office may also issue a citation against an employer. However, to lessen the risk of belated claims, employers should identify a deadline to submit reimbursements (i.e. Gattuso v. 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? Reimbursement of Employee Expenses. If the employee’s roommate demands payment from the employer for the increased electric bill, the employer would not be obligated to honor that demand: The roommate is not the employee. Audit your car allowance or reimbursement policy to identify exposure points. Labor Code 2802 LC, see endnote 1 above. LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. That includes expenses you might incur while working from home. Reimbursement for mobile employees can be tricky and ambiguous for companies across the country. Necessary expenditures or losses include all reasonable costs. What constitutes “necessary and reasonable” will depend on multiple factors, including the employee’s job responsibilities (on paper and in practice), the employee’s performance expectations while working remotely, and the actual costs incurred by the employee. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. Join 1000+ of the industry's top owners, investors, developers, brokers & financiers at THE MULTIFAMILY EVENT OF THE YEAR! Sponsored by: Everlaw An easy scenario to start: An employer switches meetings to a videoconference platform and requires employees to upgrade to a premium account (which charges a fee). Employers that do not closely abided by this law suffer the consequences. California has seen the cycle of this disconnect for decades. The new Illinois law mirrors key language in California Labor Code Section 2802, California's expense reimbursement law. The new Illinois law mirrors key language in California Labor Code Section 2802, California's expense reimbursement law. December 18, 2020. California Labor Code section 2802 states: ... focuses not on whether an employee makes a request for reimbursement but rather on whether the employer either knows or has reason to know that the employee has incurred a reimbursable expense. We hold that when employees must use their personal cell phones for work-related calls, Labor Code section 2802 1 requires the employer to reimburse them. Subscribe to Labor Code Section 2802. Labor Code 2802 LC, see endnote 1 above. Privacy Policy. That an item was “unreasonable” will not destroy the employee’s Section 2802 claim for a “necessary” expense; it will merely reduce the amount of their recovery. Thus, the first step of any Section 2802 analysis is to ask who is submitting the request. 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. Lab. students rose by 1.5% in 2020, though new student enrollment saw a small dip, according to the American Bar Association. In this area, it is better to be conservative and over-estimate than underestimate and risk a privacy violation or a Section 2802 claim for failing to fully reimburse for actual expenses. Labor Code section 2802 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. For more detailed codes research information, including annotations and citations, please visit Westlaw . 335 through 349.5] while the recovery of a penalty generally has a one-year statute of limitations. How much should the employer reimburse? If you have employees receiving a car allowance or even a mileage reimbursement you could be exposed. Under California’s new AB5 regime, many individuals previously operating as independent contractors may now be deemed employees. Can the employer get it back? Law Offices of Gary Martin Hays & Associates The California Labor Code – and, consequently, Section 2802 – only applies to employees. }); Mobile apps have become a major target for fraudulent transactions, which continues to increase. Section 2802 only requires reimbursement of necessary and reasonable expenses incurred by the employee as a condition of continued employment. Terms of Service/ The general reimbursement statute of the California Labor Code is Section 2802. Our Team Account subscription service is for legal teams of four or more attorneys. What if the employer did not know about the expense? Previously, many employers allowed remote working as a convenience for their employees. | However, courts would likely draw the line at reimbursement of fixed expenses, which the employee already had to pay before they had to work at home, such as the cable bill, as there was no “loss” to the employee as a condition of continued employment simply because the employee is working remotely. 11. Charles Kagay | On Appeals: Map a Safe Route to a Summary Judgment Appeal, National Law School Enrollment Holds Steady Despite Pandemic, An Early Cure for COVID-19 Class Actions in California: Navigating New Laws in Unprecedented Times to Win the Motion to Dismiss, Disruption as an Enabler for Change: Transforming eDiscovery in the Cloud, Mobile App Infringement: When Platform Notices Fail, Understanding the Client Journey: Attracting and Servicing Client – 100% Digitally, Follow Mileage reimbursement in California is governed by both the Labor Code, Section 2802, and the California Code of Regulations, Title 8, Section 13700-13702. 1 Section 2802.1(c) limits the scope of the section to “general acute care hospital[s]” as defined in Section 1250 (a) of the California Health and Safety Code. document.addEventListener('DOMContentLoaded', function() { Identify someone to field employee questions. Be careful, though, about delving too deeply into the “reasonableness” of a particular necessary item. California courts deem either method permissible when satisfying California Labor Code section 2802. June 12, 2020. 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 … If that same employee, however, purchased the latest, greatest desktop computer before being required to work remotely, she likely cannot submit a reimbursement for the desktop’s cost even though she must use it for work. The penalty amounts and procedures applicable to “expenses” are set forth in Labor Code … For example, if an employee […] By the same token, if an employee submits delivery service receipts for their lunches, absent an employer policy promising meals under any circumstances, those lunches were voluntary and, thus, not reimbursable. 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