Under the California employment law, reimbursement for all the necessary losses or expenditures incurred must be given to employees during the course of their employment or at the employer’s direction. If an employer fails to reimburse the employee for reasonable expenses, the employee can recover the expense, interest, and reasonable attorney fees.
At Sirmabekian Law Firm, our specialized employment attorneys will help get the rightful and deserved reimbursement that employees are owed. We recognize all the tactics used by employers to try to deny the expenses or delay reimbursement. With the law by our side, we will use our experience and know-how to help you resolve and get back your unpaid reimbursement. You deserved to be fully reimbursed if you paid for any work expenses.
To better understand what it means and what you can do about your employer’s failure to reimburse reasonable expenses in Los Angeles, we answer some of the most common questions our clients have, like:
- What are the employer’s obligations to compensate reasonable expenses?
- What is considered a “reasonable” expense?
- What tactics do employers use to underpay or deny or reimbursements?
- What types of expenses are subject to failure to reimburse?
- What happens if the employer fails to compensate lots of employees?
- What are your reimbursement rights as an employee in Los Angeles?
- In Los Angeles, is an employment attorney needed to represent you for your expense reimbursement claim?
This page provides an overview of failure to reimburse reasonable expenses and links pages to relevant employment law topics. If you still have questions after reviewing these pages, contact our office to schedule a free and confidential consultation.
Under California Labor Code § 2802(a),
An employer shall compensate their employee for all the necessary losses or expenditures incurred by the employee when the said employee is the discharge of their services, or of their compliance to the demands of the employer, even when it is unlawful unless the employee believed them to be unlawful at the time of obeying the direction.
In order to bring an action for reimbursement of necessary expenses, the employee has to show the following:
- The employee incurred losses or made expenditures;
- The losses or expenditures were incurred the indirect consequence of the employee’s discharge of their duties or obedience to the directions of the employer; and
- The losses or expenditures were necessary.
What is considered a “reasonable” business expense that must be reimbursed depends on a number of factors. Generally, an employer is required to reimburse an employee if the expenses or losses were incurred in the course of performing their job duties or duties at the direction of the employer. Even if the employer does not agree with the employee’s choice or the cost of the expense, the employer may still be liable for reimbursing the employee.
There is not a set list of expenses that are deemed to be necessary and reasonable. Factors in determining what is a necessary expenditure or loss include:
- Type of job,
- Type of business or industry,
- History of reimbursements,
- Instructions are given by the employer,
- Agreement between employer and employee,
- How other employees are reimbursed,
- Company policy on expenses,
- Business travel, and
- Comingling of work and non-work expenses.
The tactics used by employers to deny or underpayment reimbursements may depend on the employer’s motivation for failure to follow the labor laws. If the employee does not agree with the expense, the employer may treat the expense as a disciplinary measure and fail to pay because the employer is not satisfied with the workers’ decision. Alternatively, the employer may want to try and get away with paying as little as possible and may try and hide the underpayment through messy record-keeping.
Some methods and tactics employers use to deny, delay or reduce payment for the employees’ expenses may include:
- Repayment in installments
- Requiring additional steps or records for repayment
- Reducing the payment to less than the full expense
- Using set expense limits without exceptions
- Blaming employees for high expenses
- Modifying requirements after the fact to deny reimbursement
- Inaccurate record-keeping
Unfortunately, many employees do not notice small unreimbursed expenses. The reimbursement checks may take weeks or months after the expense was incurred and the employee simply does not remember the number of their expenses. Reimbursements may be folded into the workers’ salary and the worker may not review all the documentation or compare the expense reports to ensure everything was reimbursed properly.
When employees do notice that they are not being fully reimbursed, they may report the issue to HR or their boss. HR or the boss may try and put off any dispute by claiming that all the expenses were reimbursed and if they were denied it was because they violated the company policies, to put the burden back on the employee.
CITING FEDERAL TAX LAWS
There can be some confusion around expense reimbursement, even by employers. There are certain Internal Revenue Service (IRS) rules and regulations regarding deductions for travel expenses. However, these rules are separate and distinct from an employer’s requirement to reimburse employees. An employer may not properly reimburse an employee because they think they are limited by IRS laws, or the employer may try and use tax laws to trick the employee into withholding reimbursements.
The laws and regulations on reimbursements for tax purposes impacts whether the employer can claim a deduction for the expenses. Employers can generally deduct reimbursements for travel and non-entertainment-related expenses incurred by the employee during the ordinary course of business.
The process for reporting reimbursements depends on the employer’s accounting practices. There are certain standard meal allowances, per diem rates, and mileage reimbursements that an employer can use to simplify their accounting and tax process. However, if an employee goes over these limits in business-related expenses, even if the employer does not get a deduction, the employer is still required to reimburse the employee.
THREAT OF TERMINATION OR RETALIATION IN CALIFORNIA
Additionally, an employee may know there is a problem with reimbursements but fail to bring them up because the employer has indicated they may retaliate against the employee for asserting their rights or threatening to file a labor claim. The employer may have threatened some type of retaliation, or the employee may have witnessed retaliation against other employees for similar complaints. Retaliation in the job may include harassment, discrimination, demotion, or termination).
If you are unsure what to do about an employer who fails to reimburse reasonable work expenses, you can always consult with an experienced employment attorney. An experienced labor law attorney will have the insight, knowledge, and skills to confirm whether the expenses should be reimbursed, identify what the employer did to avoid paying those expenses and take the appropriate steps to make sure you get fully reimbursed for your expenses.
Certain types of expenses are often subject to a failure to reimburse claims. Common work expenses that an employer may have an issue with failure to reimburse may include:
- Travel expenses,
- Work-from-home expenses,
- Phone and phone bills,
- Internet access,
- Purchase of work-related supplies,
- Job uniforms, and
- Meals and entertainment.
Travel expenses are one of the most common areas affected by failure to reimburse. Work travel may involve daily trips to the bank, once-a-year trips for annual conventions, or have the employee on the road for a majority of the year. This can result in expensive travel costs paid out by the employee that must be reimbursed by the employer.
The employer may provide a company credit card for this travel or require the travel to be booked and paid for through the company. However, when the employee pays out-of-pocket for necessary travel expenses, the employee is generally required to be reimbursed.
Generally, commuting costs for going to and from work are not included as travel expenses. However, if the employer asks the employee to drop off a deposit to the bank on their way home, the trip to the bank is a travel expense and the employee may need to be reimbursed for mileage.
Many companies have strict travel expense policies, including limits on the type of travel allowed maximum hotel rates, or require booking the cheapest flight. However, sometimes the employer’s requests will go outside the policy limits and the employer may have to reimburse the employee for their out-of-pocket costs, even if the cost is above the company policy maximum.
For example, company policy caps hotel rates at $100 per night. The employer tells the employee to go to San Francisco to meet a client. The employee searches a number of travel booking sites and cannot find anything near $100. The employee tells the employer about the hotel problem and the employer says that the cap is $100 but the employee has to be at that meeting. The employee books a hotel in Oakland for $130 and the employer only reimburses the employee $100. Based on the employer’s directions, the employer may have failed to reimburse the employee, as required by California labor laws.
Telecommuting is becoming more popular as employees can work remotely from home or other non-office locations. Remote workers may have to be reachable by phone, email, social media, and video meetings, both in the office and outside of office hours. Remote workers may need to have a portable computer, minimum internet connection requirements, and certain types of phone plans to be able to perform their job duties.
If the employer does not provide the employee with the necessary equipment, the employer may have to reimburse the employee for the expense of providing the equipment on their own.
Many employers have restrictive policies that end up impacting multiple employees. If a job policy or procedure violates California labor laws, the violation may involve dozens of employees or more. In these situations, the employees may be able to file a class-action lawsuit against the employer.
This type of lawsuit is a way for people with similar complaints against the same employer to come together and assert their rights under California Labor Laws and federal employment laws, such as the Fair Labor Standards Act.
A class action is also a way to hold the employer responsible for a number of smaller violations that, individually, do not amount to much money. However, combined with hundreds of similar violations, it may be enough to make the employer take California labor laws more seriously.
In a class action claim, the resulting damages awarded are divided among the group and their representatives. Often, a greater percentage of the settlement goes to the person who initiated the suit.
Talk to your Los Angeles employment attorney if you suspect your employer is failing to reimburse multiple employees. Our class action attorneys accept qualified cases on a contingency fee basis, so employees pay our employment law firm only when we win money for them.
The labor laws of California give you the right to get reimbursed for business expenses, even if the employer does not want to pay. Under California Labor Code § 2802, filing a lawsuit or labor action against your employer will allow you to recover an award for reimbursement of necessary expenditures. In addition to expenses, the award shall also include interest to accrue from the date on which the employee incurred the necessary expenditure or cost.
In addition to expenses and interests, the employee may be able to recover attorney’s fees incurred in enforcing the employee’s labor law rights. Some employers try and get away with not reimbursing employees because they do not think the employee will go through the trouble of hiring a lawyer if the reimbursement isn’t very large. The ability to recover attorney’s fees is a way to make sure the employer is held accountable for their actions.
In addition, the Labor Commissioner may issue a citation against an employer who violates the state’s reimbursement obligations. This financial penalty may be a way to penalize the employer for violating the law or trying to take advantage of the employee. If the court or commissioner issues a citation against the employer, the amount of money awarded may depend on a number of factors, including:
- Amount of reimbursement,
- Actions are taken by the employer,
- Number of violations,
- Past labor violations of the employer, and
- A number of employees were affected.
If you suspect your employer is not fully reimbursing you for work expenses, you should not just accept it. Some employees do not want to fully assert their labor rights because they are worried about losing their job or the money is not enough to justify getting fired.
The Labor Code protects employees who file a complaint with the Labor Commissioner or threaten to file a complaint. Under California Labor Code 98.6, an employer shall not discharge an employee, or in any manner discriminate, retaliate, or take adverse action against an employee for asserting their rights to demand payment of wages due. If you have any concerns that your employer may retaliate against you for your expense reimbursement claim, you may want to talk to an experienced employment attorney.
Contact Sirmabekian Law Firm online or at 818-473-5003 to schedule an appointment to speak with an attorney who has the skills and experience to help make sure you get the best outcome for your unpaid expenses case. An initial consultation will not cost you anything and you will be able to get an idea about your rights and options to move forward with your reimbursement claim.
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