Know Your Reimbursement Obligations for Work-Related Expenses

As a California employer, you are obligated to reimburse your employees for all necessary and reasonable expenses incurred as a direct result of performing their job. This requirement is outlined in the California Labor Code 2802. What does this mean for you as an employer? 

 To be eligible for reimbursement under the California Labor Code, expenses must be both reasonable and necessary for employees to do their jobs. These expenses include work-related travel, business use of personal cell phones, conference fees, uniform costs, expenses related to entertaining business associates, postage, training or education, office equipment, internet, driving costs including mileage, and more!

When it comes to compensating employees for mileage, many California employers prefer to meet their reimbursement responsibilities by using the IRS's optional standard mileage rate for business use. For 2024, the reimbursement rate is 67 cents per mile driven for business purposes. 

There are financial consequences for failing to reimburse your employees for these work-related expenses. As an example, they could file a wage claim with the California Labor Commissioner, which might result in you having to pay back wages, interest, and penalties. 

Remember, any expense incurred by your employees as a direct result of fulfilling their job duties must be reimbursed by you. Consider implementing an expense reimbursement policy and/or providing your employees with an expense reimbursement spreadsheet to make expense tracking easy. If you need assistance developing a policy or advice on how best to support your employees while remaining compliant, reach out to an HR professional.