In California, employers must reimburse their employees “for all necessary expenses or losses incurred by the employee as a direct result of the performance of his or her duties or obedience to the employer’s instructions.” (Labour Code Section 2802.) Expense reimbursements may include use of personal cell phones, computers, vehicles, etc. exploitation on employees.
For California employers, the best method to track employee expenses is to implement procedures for employees to submit their expense reimbursements and which expenses are properly reimbursable. Employers must also effectively communicate these procedures to employees so that they understand the appropriate guidelines. Employers should also consider a policy allowing employees to document expenses. One option is for employees to produce a receipt for expenses incurred. Receipt must include date of purchase, item purchased, amount of purchase.
Whether an expense should be reimbursed depends on whether the expense was necessary and reasonable as a condition of employment, whether the expense was dependent on the employee’s duties, and whether the expense was a direct result of the functions of the employee or at the request of the employer. – all of which should be reflected in your policy. Some common work-related expenses include:
- mileage expenses
- Trip costs
- cell phone use
- Parking fees
- taxi fares or public transport fares
- car rental
Although having reimbursement procedures in place is a good strategy, sometimes employees do not submit their expenses for reimbursement. If an employer knows that an employee has incurred expenses, but has not submitted an expense report, then they must reimburse the employee. In addition, employees may seek reimbursement for necessary expenses within three years of incurring the expense. Ultimately, legally compliant policies are the best practice for California employers.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.