Reimbursement Requirements - Shegerian Law

Reimbursement Requirements

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Following the coronavirus pandemic, working from home is a new normal for many employees in California. While this type of working situation can be beneficial, employees are not required to take on the financial burden of work-related expenses.

It is important for workers to understand their reimbursement rights when it comes to such expenses. This is also to ensure that they know when to seek help from legal professionals such as a reimbursement lawyer.

California Employment Law Reimbursement Requirements

According to Labor Code 2802, employers are required to reimburse workers for “all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.”

The purpose of this California expense reimbursement law is to ensure employers do not merely shift the operating costs that are required for running a business and work-related duties onto their employees. There is no way for an employer to get their employee to waive their rights to expense reimbursement. Expense reimbursements can include the use of:

  • Cell phones and cellular data plans
  • Mileage and other travel expenses
  • Rental vehicles
  • Taxis, rideshares, or public transportation
  • Cost of attending conferences
  • Costs related to entertaining business associates
  • Postage
  • Training and education costs

Remote workers also incur specific expenses that are often eligible for reimbursement. Some common expenses that are eligible for reimbursement for remote workers include:

  • Office equipment, like desks and ergonomic chairs
  • Laptops or computers
  • Printing equipment, including ink and paper
  • Online subscriptions, such as Zoom
  • Home utilities
  • Home internet bills

Because these types of expenses are for work duties, the employee is eligible to be reimbursed for them. However, once the company reimburses an employee, the company owns the property that was purchased. This means that an employee may be required to hand over what the company purchased once the employment contract between both parties ends in some way.

  • The California Supreme Court has indicated that repayment by increasing a worker’s salary is sufficient to meet the employer’s legal duty. However, the employer must itemize the increase in pay to show what part of the wage increase was used for reimbursement. Without this itemized list, it would be nearly impossible to tell whether the employee was being properly compensated and it may be difficult to enforce the California reimbursement law.

  • Under California labor laws, you are entitled to reimbursement for travel expenses or losses that are directly related to your job. Common travel expenses may include: travel time, mileage expense, car rental, gas, hotels and motels, tolls, postage, and taxi or cab fees. Meal allowances for business travel are also a requirement employers should cover for their employees.

  • HR Manual sections 2201Travel and Relocation Policy and 2203 – Allowances and Travel Reimbursements law provide additional travel policy information, including lodging reimbursement policy and the excess lodging request approval process.

    • Employees who incur approved overnight lodging expenses may be reimbursed.
    • Employees must stay at a commercial lodging establishment catering to short-term travelers, such as a hotel, motel, bed and breakfast, public campground, etc.
    • Employees must provide a receipt to claim reimbursement; no reimbursement will be paid without a receipt.
    • Should the base room rate exceed the rates noted below, an Excess Lodging Rate Approval Request (STD 255C) must be submitted and approved by your department and/or CalHR before the trip takes place.
  • The state of California adheres to the Internal Revenue Service’s provisions for an Accountable Plan (Plan). In general terms, the Plan has certain requirements, including the submission of receipts when required, that must be met for an employee to receive full reimbursement of their authorized business travel expenses. The employer may reimburse employees by submitting expense reports with the required documentation in writing to the company within 60 days after returning from a business trip.

    As long as the requirements of the Plan are met, and state travel policy has been followed, Transportation Network Company or Short-Term Rental expenses are reimbursable.

    These requirements are:

    • The expenses must have a business connection and must be incurred while performing duties as an employee.
    • The expenses must be adequately accounted for with the employer within a reasonable period of time.
    • Any excess reimbursement or allowance must be returned within a reasonable period of time to the employer.
    • Receipts must show the date, time, location, and cost of the expense.
    • Additional information about receipts and the Plan may be found in the Payroll Procedures Manual on the State Controllers’ Office website.

Protecting the Rights of California Employees

Employees have 3 years to seek reimbursement for work expenses that they incurred at an organization. It is recommended that employees submit an expense report regularly according to procedures set in place by the company. If you believe you are entitled to expense reimbursement and need help enforcing your rights, contact Shegerian & Associates for a free case evaluation by a dedicated expense reimbursement lawyer.

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