Technically and conservatively, yes. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information. | Posted in Best Practices For California Employers, Expense Reimbursement. 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. Join 1000+ of the industry's top owners, investors, developers, brokers & financiers at THE MULTIFAMILY EVENT OF THE YEAR! The manager also recalls a conversation where the manager told that employee they’d never need to wear anything but t-shirts, jeans, and baseball caps to work in the field, while the employer also maintains a strict “business casual” policy applicable to anyone who interacts with clients. Section 2802 of the California Labor Code requires employers to reimburse their employees for any “necessary expenditures or losses” that they incur as a direct result of doing their job. Various California labor and tax laws outline the types of reimbursable expenses. The most common examples are mileage, travel, and dining expenses. Reid and Riege, P.C., a mid-sized Connecticut law firm with a well-established corporate health and human services practice, seeks an attorn... Corradino & Papa, LLC, a personal injury law firm,actively seeking to hire 0-2 years' experience Associate. Is the reimbursement request necessary and reasonable? The California Labor Law. Why are these documents on your desk and what do you have to do as an employer? Thus, the first step of any Section 2802 analysis is to ask who is submitting the request. However, COVID-19 and the resulting shelter-in-place orders have redefined the working landscape, requiring many employees to work remotely to keep businesses afloat. The commissioner may issue a citation with financial penalties against an employer for violating California’s travel reimbursement obligations. Reimbursement requests also could, conceivably, take the form of a screenshot from mobile payment services or electronic transfer platforms. Both options are priced the same. VI. | California Labor Code section 2802 has been around for a long time (since 1937, to be exact). June 18, 2020. The code states that the penalty for not reimbursing an employee includes: Costs incurred in obtaining reimbursement; Liability for expenses, plus interest; Attorney fees Previously, many employers allowed remote working as a convenience for their employees. Our Compliance bundles are curated by CLE Counselors and include current legal topics and challenges within the industry. The cost of the premium account would be reimbursable under Section 2802 as employers cannot pass their operating costs to their employees. Site Map / Lab. Be careful, though, about delving too deeply into the “reasonableness” of a particular necessary item. The best practice is to provide reimbursement within the next pay period following submission. California Labor Code section 2802 requires employers to reimburse employees for “all necessary business expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.” Before the pandemic, business expenses were usually limited to costs such as business travel or personal car mileage because workforces were operating within offices. What are your obligations as an employer? Whether the employees have cell phone plans with unlimited minutes or limited minutes, the reimbursement owed is a reasonable percentage of their cell phone bills. Technically, yes. California Labor Code section 2802 has been around for a long time (since 1937, to be exact). LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. 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. Gain access to some of the most knowledgeable and experienced attorneys with our 2 bundle options! (“(d) In addition to recovery of penalties under this section in a court action or proceedings pursuant to Section 98, the commissioner may issue a citation against an employer or other person acting on behalf of the employer who violates reimbursement obligations for an amount determined to be due to an employee under this section. Moreover, keep in mind that if the employer chooses to provide additional compensation to account for reimbursements, there will be tax implications, which could result in the employer failing to cover all of the cost of the intended reimbursement or the employee being penalized with higher payroll taxes to account for the “raise” in compensation to address the reimbursements. That includes expenses you might incur while working from home. Imagine that after weeks of working remotely due to COVID-19, you return to your office only to discover a stack of papers on your desk in a folder titled “requests for reimbursement.”  You peer through the contents and find cell phone bills, a receipt for a $750 printer, a bank statement with the account fees highlighted, a clothing store shipping invoice with $49.95 of expedited shipping, a receipt for a 50” television, and a screenshot of a mobile payment service request with an electric plug emoji from a username you have never seen before. }); Mobile apps have become a major target for fraudulent transactions, which continues to increase. With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. Whatever method the employer chooses, make sure the reimbursement is timely to avoid falling afoul of other wage and hour laws. 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. What if the employer did not know about the expense? Sponsored by: Everlaw What if the employee submitted a request for reimbursement for business casual clothing tops with an overnight shipping charge of $49.95? 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. Because working remotely was not required, many employers could decline “work from home” reimbursements because the employee’s expenses were voluntary (i.e. 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." var myDate = new Date(parseInt(1604611970000)); Imagine it is one week after the “shelter-in-place” order was lifted and, after weeks of working from home, you plop into your office chair to discover a folder on your desk titled “Requests for Reimbursements.” You leaf through the contents. The new Illinois law mirrors key language in California Labor Code Section 2802, California's expense reimbursement law. However, an employer should only be responsible for a reasonable percentage of that bill. 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. Further, employers cannot contract around their Section 2802 reimbursement obligations. 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. “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. California Employment law requires employers to reimburse employees for all “necessary” expenses they incur while performing their jobs. She could, however, submit reimbursements for work-specific programs she was required to install on the device in order to fulfill her job duties. This law is intended to prevent employers from passing their operating expenses on to their employees (Labor Code section 2802). Labor Code 2802 LC, see endnote 1 above. Employers do not need to provide reimbursement for expenses incurred by independent contractors. Employers desire increased transparency into the reimbursements it is distributing. 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. The accountant may need a printer, but not the same $750 high-resolution color printer used by a marketing director to print prospective client handouts. Get the timely legal news and critical analysis you cannot afford to miss. Risk-averse employers may choose to reimburse the entire home internet bill. The three key phrases found in Section 2802 are: Indemnity; Attorney’s fees ; Penalties; Indemnity refers to the obligation to restore and make whole for a loss incurred, either as a result of a statutory duty or a contract of indemnity. Reimbursement would only be required if the classes were an employer-imposed requirement of continued employment. California law generally holds that an employer may not pass the ordinary costs of doing business on to employees. Advertise With Us/ Is it a work-related expense? 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). About Us / 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. In fact, employees throughout California may be owed significant compensation for basic work-from-home expenses. A weekly, curated selection of our international content from around the globe, across the business of law, in-house, regulatory, technology and more, with expert insights from our senior editors. This could result in the submission of multiple documents: An employee could submit a shipping invoice and a copy of their credit card statement to show payment for new equipment. Similarly, employees working remotely will need devices to work from – a laptop, desktop, tablet, etc. 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. As stated above, an employer must reimburse an employee for 100 percent of any “necessary expenses,” which California law defines as for the actual costs incurred in … 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. Thus, the first step of any Section 2802 analysis is to ask who is submitting the request. That said, if the employer prevents or discourages its employees from requesting reimbursements, the fact that it did not receive a reimbursement will not absolve it of its Section 2802 obligations. By Terry O'Connor Labor Code § 2802 requires California employers to reimburse employees for all necessary expenditures incurred in the performance of their duties. New Law Targets Sexual Harassment in California Agriculture McLe Self-Study: When Remote-Work Expenses Must Be Reimbursed Under Labor Code Section 2802 Cases Pending Before the California … However, Section 2802 only requires reimbursement for “necessary” and “reasonable” costs incurred by the employee as a condition of continued employment. 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… $("#sub1").append( pday ); Labor Code 2802 LC, see endnote 1 above. In California, ... the cost of stamps and printer ink may be the responsibility of the employer and an employee may be entitled to reimbursement. 8. What about an accountant demanding a printer? 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. Generally, an employee may seek reimbursement of a necessary business expense within three years of incurring the expense. CA 2802. What are the consequences for failing to pay? var pday = moment(myDate).format("MMMM DD, YYYY"); Suddenly, the request and the $49.95 in overnight shipping charge may not appear as crazy. Code § 2802(a). What can I do to control the anticipated reimbursements? Our second option allows you to build your bundle and strategically select the content that pertains to your needs. When an employer violates the California Labor Code, the California Labor Commissioner’s Office may also issue a citation against an employer. 4. The purpose of this statute is "to prevent employers from passing their operating expenses on to their employees." For example, if an employee […] Employers should be open-minded when it comes to documentation of a requested reimbursement. California Labor Code Section 2802 outlines employer responsibilities concerning business expense reimbursement. California Labor Code Section 2802 outlines employer responsibilities concerning business expense reimbursement. Receipts are no different. 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 . It may require comparing prior months’ bills to the current month to establish an amount “attributable” to the remote work. 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. If the employee’s electric bill increased because they are now working remotely, is that reimbursable? In general, employers must reimburse the cost of uniforms, travel expenses, tools and equipment required for the job. Reimbursement for mobile employees can be tricky and ambiguous for companies across the country. Labor Code section 2802, subdivision (a) requires: "[a]n 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…." 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