In California, employee protection laws are among the strongest in the country, and one important area involves the reimbursement of work-related expenses. Under the state’s Labor Code, employers are responsible for covering necessary expenses that employees take on while doing their jobs. When companies fail to reimburse these costs, they expose themselves to serious legal trouble, including lawsuits and financial penalties. California Business Lawyer & Corporate Lawyer, led by a large enterprise employer defense lawyer in Southern California, frequently assists companies in addressing reimbursement disputes to ensure compliance with California labor laws. This article breaks down what the law requires, common examples of expenses, and what happens when an employer doesn’t meet their obligations.
Understanding Labor Code Section 2802
At the heart of California’s reimbursement laws is Labor Code Section 2802. It requires employers to pay back employees for any necessary costs they incur because of their job responsibilities. The purpose behind the law is simple: workers shouldn’t have to spend their own money to get their job done. The Nakase Law Firm, known for offering experienced counsel when searching for an employer defense attorney near me Coachella Valley, helps businesses know the complexities of mandatory reimbursement under Labor Code Section 2802.
When talking about “necessary expenditures,” the law refers to anything that an employee reasonably needs to perform their job — whether that’s driving their own car for work errands, using their personal phone for client calls, or setting up a home office. The bottom line is, if the expense directly relates to work duties, the employer is likely on the hook for it.
What Types of Expenses Must Be Reimbursed?
The range of expenses that fall under this legal requirement is broader than many people think. Some of the most common reimbursable expenses include:
- Mileage and Vehicle Costs: Employees using their personal vehicles for business must be reimbursed for mileage, tolls, and parking fees.
- Travel Expenses: Flights, hotel stays, meals during business trips, and transportation costs while traveling.
- Cell Phone and Internet Bills: When employees must use their personal phones or home internet for work, even a portion of those bills needs to be reimbursed.
- Uniforms and Gear: If employees must buy specific uniforms or equipment to do their job and the employer doesn’t provide them, those costs should be covered.
- Home Office Setups: With remote work becoming a standard in many industries, expenses related to setting up a functional home office — such as desks, chairs, or a share of the internet bill — must be reimbursed.
Even partial usage for work purposes can be enough to require reimbursement. Employers are expected to cover a reasonable portion of mixed-use expenses, such as when an employee uses their personal phone for both personal and work calls.
What Happens When an Employer Refuses to Pay?
If an employer fails to reimburse legitimate work-related expenses, they aren’t just facing minor complaints — they could be looking at real legal trouble.
Employees Can Take Legal Action
Employees who don’t get reimbursed have the right to take action by either filing a complaint with the California Labor Commissioner or filing a lawsuit. If they win, they can recover:
- The amount of the unpaid expenses
- Interest on those expenses
- Attorneys’ fees and court costs
Because attorneys’ fees are part of the recovery, even relatively small claims can quickly become very costly for employers.
Additional Penalties for Willful Violations
If an employer is found to have deliberately withheld reimbursement, the penalties grow even steeper. Under Labor Code Section 203, an employer who fails to pay final wages — which can include unpaid reimbursements — may owe waiting time penalties. This penalty can add up to 30 days of the employee’s regular daily wage.
Risk of Class Actions and PAGA Claims
If more than one employee is affected, the issue can escalate into a class-action lawsuit or a representative action under the Private Attorneys General Act (PAGA). These types of claims are much more expensive for employers to settle or defend, often far exceeding the original cost of the expenses that went unpaid.
How Employees Can Prove Their Claims
Employees don’t need perfect documentation to prove they are owed reimbursement. Labor boards and courts understand that not every expense is accompanied by a detailed receipt, especially for small or regular purchases.
To succeed in a claim, employees generally need to show two things:
- The expense was reasonable and necessary.
- It was incurred while doing their job or following instructions from their employer.
An employer can’t dodge responsibility simply by claiming there was no formal expense policy. Labor Code Section 2802 applies whether or not internal policies are in place.
Possible Employer Defenses
Although the law strongly protects employees, employers do have some possible defenses:
- Expenses That Were Not Necessary: If an expense was unreasonable or extravagant, the employer might not have to pay it.
- Non-Work-Related Costs: Costs unrelated to work are not covered.
- Delay in Reporting: If an employer has a clear reporting policy and an employee fails to submit claims in a timely manner, reimbursement could be lawfully denied.
Still, employers must tread carefully. Burdensome or confusing reporting rules could backfire and be challenged as unlawful.
Remote Work Complicates Reimbursement
Remote work has changed the landscape dramatically. Since the COVID-19 pandemic, many workers have operated from home, bringing new kinds of expenses into play.
California regulators have made it clear that employers must now cover reasonable home office costs. These include a share of employees’ internet bills, phone use, and the cost of essential home office equipment. Employers that refuse to recognize these obligations are risking even more claims and penalties.
What Employees Should Do If Reimbursement Is Denied
If an employer refuses to reimburse expenses, employees should take these steps:
- Keep Good Records: Save receipts, keep mileage logs, and maintain records of work-related phone or internet usage.
- Submit Requests Properly: Follow any established procedures for submitting expenses. If no procedure exists, make reimbursement requests in writing.
- Document Communications: Keep emails or messages showing efforts to get reimbursement.
- Seek Legal Advice: If an employer continues to refuse, an employee should contact a labor attorney or file a complaint with the Labor Commissioner’s office.
How Employers Can Protect Themselves
To avoid costly disputes, employers should:
- Create Clear Reimbursement Policies: Make it easy for employees to understand how and when to submit expenses.
- Train Supervisors: Ensure that managers know reimbursement rules and encourage employees to report expenses properly.
- Adapt to Remote Work: Update reimbursement practices to account for the realities of home-based work.
- Act Quickly: Once valid expenses are submitted, reimburse them without delay.
Final Thoughts
Ignoring work-related expense reimbursements in California is risky and expensive for employers. Companies must take their legal obligations seriously or face not only individual claims but the possibility of class-action lawsuits and substantial financial penalties.
On the employee side, workers have powerful tools to ensure they are treated fairly. Knowing what is legally required — and when to seek help — can make a major difference in securing reimbursement for out-of-pocket costs.
California Business Lawyer & Corporate Lawyer Inc. and The Nakase Law Firm both represent important resources for businesses and employees who want to understand their rights and obligations better and handle disputes before they escalate.