What to Know

Employee Expense Reimbursement in California

Expense Reimbirsement. We represent employees in Los Angeles and everywhere else in California.

The Los Angeles employment lawyer Zachary J. Sempers represents clients dealing with employee expenses reimbursement disputes and lawsuits in Los Angeles and throughout California. To discuss your case during a free consultation, call 888-762-0297.

Employee expense reimbursement defined

California Labor Code requires employers to reimburse employees for all the reasonable and necessary business expenses incurred in the scope and course of their employment. In other words, employee expense reimbursement means that your employer must pay you back for the losses you incurred as part of doing your job as long as the expenses are reasonable and necessary.

California employee expense reimbursement laws

California Labor Code § 2802 mandates employee expense reimbursements for covered work-related expenses incurred by employees. The section of the California Labor Code reads that employers are legally required to reimburse their employees for all "necessary" and "reasonable" costs, expenses, and losses incurred "in direct consequence of the discharge of the duties."

The main purpose of California’s employee expense reimbursement law is to prevent employers from passing some or all of their operating expenses on to their workers. It is important to note that California Labor Code only requires reimbursement for “necessary” and “reasonable” work-related expenditures.

Can an employer refuse to reimburse expenses?

Yes, an employer may refuse to reimburse an employee for his or her work-related expenses if they believe that the losses incurred by the employee are not necessary or reasonable. What costs meet the definition of “reasonable” and “necessary” depends on a multitude of factors, including but not limited to:

  • The employee’s job duties;
  • Whether or not the work could have been done without incurring the losses; and
  • The employee’s performance expectations.

If you believe that your employer has violated your rights by refusing to reimburse you for your expenses, do not hesitate to speak with our experienced employment lawyer at The Sempers Law Firm.

Reimbursement expense receipt guidelines

There are no strict reimbursement expense receipt or request guidelines in California.

In most cases, California employers reimburse employees for their work-related expenses when such employee expense reimbursement is requested. This may make sense when the employer is not aware of the expenses incurred by the employee in the course of their employment.

However, if the employer anticipates an employee to incur losses and expenses regularly, the employer could provide regular compensation or increase the employee’s salary to make up the difference so long as there is a way to determine what amount is being paid for labor and what amount is for reimbursement.

Do reimbursements require receipts?

Yes, in the vast majority of cases, employers require receipts from employees to verify their work-related expenses. The employee must be able to show receipts in order to prove that the expense was actually incurred.

If you lost the receipt, you might still be able to get reimbursed for your expenses. Contact an attorney to help you in your employee expenses reimbursement case.

Reimbursement expense pay stub guidelines

California Labor Code § 2802 does not specify the manner in which employers must reimburse their employees for the necessary expenses incurred while doing their job. However, California law does require that employees be able to determine what amount is for labor provided and what amount is for expense reimbursement. Doing so can prevent inaccurate wage statement claims.

A salaried employee who receives enhanced compensation for work-related expense reimbursement may be able to pursue a claim under California Labor Code § 226(a) against their employer for failing to clearly identify the reimbursement amounts on their wage statements.

When providing enhanced compensation for a commission-based employee, the employer may reimburse the employee for their work-related expenses based on their performance. However, if an employee earns less commission than anticipated, the employer may end up not reimbursing the employee for all their reimbursable expenses and losses.

California mileage reimbursement law

California employers must reimburse employees for work-related miles driven. For further information, call our office.

Employee expense reimbursement: Commute

Generally, employees are entitled to reimbursement for all travel-related expenses as part of their job. The only exception is the employee’s commute to and from work. When driving or traveling as part of his or her job, an employee may be entitled to reimbursement for the following travel-related expenses:

  • Mileage expenses
  • Biking expenses
  • Parking fees
  • Public transportation fares
  • Car rental
  • Airfare
  • Taxi and rideshare fees
  • Parking fees
  • Tolls

Keep in mind that any expenses incurred by the employee when driving to and from work are generally not reimbursable in California.

Employee expense reimbursement: Uniforms

Whether or not an employee can obtain reimbursement for buying and maintaining a uniform depends on the employee’s job and whether the uniform is required by the employer. It is important to understand the difference between requiring clothing and employer-mandated uniform.

Required clothing refers to an employer instructing employees to wear specific types of clothing, such as a white shirt and black pants. However, if the employee is required to wear a uniform, they must be reimbursed for the cost of the uniform as well as maintenance costs.

Employee expense reimbursement: Travel for business

In California, any work-related expenses incurred by an employee as part of their job are eligible for reimbursement. Thus, when an employee is sent on a business trip or travels for business, their employer must reimburse for all the travel-related expenses, including airfare, rental car, hotel accommodations, meals, currency conversion fees, and others.

Penalty for failing to reimburse expenses

If an employer fails or refuses to reimburse an employee for their expenses, the employer may require the employee to prove that the losses are related to work or were reasonable and necessary.

Failure to reimburse employees for their work-related expenses may expose the employer to penalties such as:

  • The court costs and fees associated with the lawsuit;
  • The total amount of reimbursable expenses incurred by the employee
  • Interest (typically 10% of the total amount)
  • Attorneys' fees associated with litigation

Consult with an employment lawyer to find out what damages are available in your lawsuit against the employer who fails to reimburse you for your work-related expenses.

How long does a company have to reimburse expenses?

In most cases, employees may request reimbursement for the necessary and reasonable expenses within three years of incurring the expense. However, many employers create policies that require employees to submit requests for reimbursement within a particular number of days after incurring the expenses.

Is expense reimbursement considered income?

No. As long as your employer completes the pay stub accurately in compliance with their expense reimbursement policies, the expense reimbursement will not count as wages or income to the employee.

For more information

To speak with an attorney, call 888-762-0297.

Consultations are free.

We handle employment disputes in Los Angeles, Sacramento, San Diego, San Bernardino, Santa Clara, San Francisco, San Jose, Oakland, Orange County, and Northern and Southern California.

Last updated on September 22, 2021.

Additional Resources

• California Labor Code § 2802 explains employee expense reimbursement laws.

• California 2021 Mileage Reimbursement Rates for Use of Personal Vehicle for state employees.