In California, employers are required to reimburse their employees for reasonable business expenses. That means if an employee uses their own money for business-related expenses, they should be paid back in full.
California Law Related To Employee Expense Reimbursement
California Labor Code Section 2802 outlines the responsibilities of employers when reimbursing an employee for necessary business expenses. The law does not specify what amounts are considered necessary, but it does require employers to reimburse expenses or losses. In order to be reimbursable, the expense must have been incurred during “the course and scope of employment.” An employer is responsible to ensure that employees are getting reimbursed for business-related expenses and should have a written reimbursement policy for its employees. An employer’s policy to waive an employee’s right to reimbursement of his or her expenses is not enforceable. California laws allow an employee up to three years to submit a reimbursement request.
What Are Reasonable Business Expenses?
Various tax and labor laws in California outline the types of business expenses that are reimbursable. Some of the most common ones that are reimbursable include:
- Mileage: Mileage reimbursement rates are calculated by the Internal Revenue Service (IRS). In 2019, the mileage rates for traveling by car, pickup truck, SUV, or van were:
- $.58 per mile driven for business
- $.20 per mile for moving or medical purposes
- $.14 per mile driven while in service of a charitable organization
- Required cell phone: Employers must reimburse employees if they are required to use a personal cell phone for business-related work.
- Training or education: If the employee is required to obtain training or education, the employer must reimburse them for the course or class cost.
Additionally, pursuant to California Code Section 2802, an Employer must also pay for “reasonable and necessary” home office expenses incurred by an employee if they are required to work remotely from home. These expenses may include:
▪ Utilities such as internet or broadband
▪ Cell phone or landline service
▪ Software or hardware used for teleconferencing such as printers and fax machines
▪ Purchase of office supplies such as a desk, computer, and/or chair
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