California Reimbursement Pay

Under California Labor Law, must employers reimburse employees for expenses incurred at work such as auto or mileage expenses?

Yes. California Labor Code section 2802 requires employers to indemnify their workers for expenses they necessarily incur in their duties. If an employee’s duties require the use of the employee’s car, the employee should receive reimbursement for automobile expenses such as mileage, gas, and wear and tear.

Under California labor law, employers must reimburse employees the entire expense of using personal automobiles. In Gattuso v. Harte-Hanks Shoppers, Inc., an outside salesperson wanted to recover for driving his personal car to meet clients, and the California Supreme Court held that employers could adopt different types of expense reimbursement plans under California law such as lump-sum payments, the IRS Standard Mileage Rate, or higher wages to compensate for auto expenses. Whatever the method, the Court stated that the expense plan must reimburse for all costs incurred — even the tax effect of using higher wages to compensate for car expense. The employer must communicate to its workers the method or formula used to reimburse for car expenses.

The upshot is that employers can have different expense reimbursement plans, but the plan must reimburse the entire cost of using a personal car on the job, including depreciation. If the plan does not fully compensate for all expenses, the employee can recover the difference. Employers must tell employees how its formula or method for reimburses for automobile expenses; merely stating that wages cover auto expenses is not enough.

If you are not fully compensated for auto or car expenses and need experienced representation by an employment lawyer who will fight passionately for your rights, please contact Mr. Kaufman at 818-990-1999 or email him here.