Employer Won't Reimburse Expenses? CA LC 2802 Says They Must [Free]

📋 Overview: California Expense Reimbursement

California Labor Code Section 2802 requires employers to indemnify employees for all necessary expenditures incurred in the course of their employment. This is one of the strongest employee expense protection laws in the nation and covers a wide range of business-related costs.

What the Law Requires

Under LC 2802, employers must reimburse employees for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or as a result of the employer's directions. The reimbursement must be made within a reasonable time after the expense is incurred.

The "Necessary Expense" Standard

An expense is "necessary" if it is:

Required to perform job duties
Incurred at the employer's direction or with their knowledge
Reasonable in amount for the expense type
Actually incurred by the employee (not just estimated)

Why This Matters

Many California employers fail to properly reimburse employees for legitimate business expenses, especially in the era of remote work. Common violations include:

No Reimbursement Policy

Employer has no expense reimbursement policy or process in place

Below-Market Rates

Mileage reimbursement below the IRS standard rate

Denied Claims

Legitimate expense requests rejected without valid reason

Remote Work Costs

No reimbursement for home office, internet, or phone used for work

What You Can Recover

A successful expense reimbursement claim can include:

Unreimbursed expenses - The full amount of necessary business expenses
Interest - 10% per year on amounts owed
Attorney fees and costs - Recoverable under LC 2802(c)
Wage statement penalties - If expenses were improperly deducted from wages (LC 226)

💰 What Expenses Must Be Reimbursed?

California law requires reimbursement for a broad range of business expenses. Here are the most common categories:

Vehicle and Mileage Expenses

Business Mileage

Miles driven for work purposes (not commuting) must be reimbursed at a reasonable rate, typically the IRS standard mileage rate

Parking and Tolls

Parking fees, bridge tolls, and road tolls incurred for business travel

Vehicle Maintenance

If the employer requires use of a personal vehicle, proportionate maintenance costs may be reimbursable

Cell Phone and Communication

Personal Cell Phone

A reasonable percentage of monthly cell phone costs if required to use personal phone for work calls, texts, or emails

Home Internet

Proportionate share of home internet costs for remote workers who must use their own service

Work Apps/Software

Apps or software purchased for work purposes at employer's direction

Important: Cell Phone Reimbursement Required Even If Employee Has Unlimited Plan

Per Cochran v. Schwan's Home Service (2014), employers must reimburse employees for work use of personal cell phones even if the employee has an unlimited calling plan. The employer cannot avoid reimbursement by arguing the employee incurred no additional cost.

Home Office Expenses (Remote Work)

Computer Equipment

Laptop, monitor, keyboard, mouse, webcam, headset, and other equipment required for remote work

Office Supplies

Paper, printer ink, pens, notebooks, and other supplies needed to perform job duties

Office Furniture

Desk, chair, and ergonomic equipment if employer requires a home office setup

Utilities

Proportionate share of electricity if working from home significantly increases utility costs

Tools, Equipment, and Uniforms

Required Tools

Tools required to perform job duties that the employer does not provide

Safety Equipment

PPE, safety gear, and protective equipment required by the job

Uniforms and Maintenance

Cost of required uniforms and their cleaning/maintenance (LC 2802 and Industrial Welfare Commission orders)

Travel and Entertainment

Business Travel

Airfare, hotels, rental cars, and meals during business trips

Client Entertainment

Meals and entertainment expenses incurred while entertaining clients at employer's direction

Conference Fees

Registration fees for work-required conferences, training, and seminars

What is NOT Reimbursable

Commute costs - Regular commuting from home to work is not reimbursable
Purely personal expenses - Items used solely for personal purposes
Unnecessary or unreasonable expenses - Luxury items when basic items would suffice
Expenses not actually incurred - Hypothetical or estimated expenses

🚗 IRS Standard Mileage Rates

The IRS standard mileage rate is the benchmark for reasonable mileage reimbursement. While California law does not mandate this specific rate, paying less may constitute a failure to fully reimburse the employee.

Current and Recent IRS Mileage Rates

Year	Business Rate (per mile)	Notes
2025	70 cents	Current rate (effective January 1, 2025)
2024	67 cents	Full year rate
2023	65.5 cents	Full year rate
2022 (Jul-Dec)	62.5 cents	Mid-year increase due to fuel costs
2022 (Jan-Jun)	58.5 cents	First half of year
2021	56 cents	Full year rate

What the IRS Rate Covers

The IRS standard mileage rate is designed to cover the full cost of operating a vehicle, including:

Gasoline and fuel costs
Oil and routine maintenance
Insurance (proportionate)
Depreciation
Registration and taxes

Employers who pay significantly below this rate may not be fully reimbursing employees for the actual cost of using their vehicles.

Sample Mileage Calculation

Example: Sales Representative - 2024

Employee drove 800 miles per month for client visits. Employer paid 40 cents/mile instead of the IRS rate of 67 cents/mile.

Total business miles (12 months x 800) 9,600 miles

IRS rate reimbursement (9,600 x $0.67) $6,432.00

Employer actually paid (9,600 x $0.40) $3,840.00

Unreimbursed mileage expense $2,592.00

Interest (10% for 1 year average) $129.60

TOTAL OWED (Before Attorney Fees) $2,721.60

Employer-Set Rates Below IRS Standard

If your employer reimburses at a rate significantly below the IRS standard, you may have a claim for the difference. The burden shifts to the employer to prove their rate actually covers the employee's costs - which is difficult when the IRS has determined a higher rate is necessary to cover typical vehicle operating costs.

⚖ Legal Basis

California's expense reimbursement requirement is primarily governed by Labor Code Section 2802. Understanding this statute and related case law strengthens your demand.

📚

Labor Code Section 2802(a) - Expense Reimbursement Required

An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful.

📚

Labor Code Section 2802(b) - Reasonable Expense Standard

All awards made by a court or by the Division of Labor Standards Enforcement for reimbursement of necessary expenditures under this section shall carry interest at the same rate as judgments in civil actions. This currently means 10% per annum.

📚

Labor Code Section 2802(c) - Attorney Fees

For purposes of this section, the term "necessary expenditures or losses" shall include all reasonable costs, including, but not limited to, attorney's fees incurred by the employee enforcing the rights granted by this section.

Key California Case Law

Cochran v. Schwan's Home Service (2014) 228 Cal.App.4th 1137

The California Court of Appeal held that employers must reimburse employees for use of personal cell phones for work purposes even if the employee has an unlimited calling plan. The court reasoned that requiring employees to use their personal phones for work without reimbursement effectively shifts a business expense to the employee.

Gattuso v. Harte-Hanks Shoppers (2007) 42 Cal.4th 554

The California Supreme Court held that employers have a duty under LC 2802 to reimburse employees for all necessary expenditures incurred in performing their job duties. The employer cannot shift these costs to employees through policies or agreements.

Stuart v. RadioShack Corp. (2009) 641 F.Supp.2d 901

Established that mileage reimbursement below the IRS standard rate may violate LC 2802 if it fails to fully reimburse the employee's actual vehicle operating costs. The IRS rate represents a reasonable estimate of actual costs.

Statute of Limitations

3 years from when each expense was incurred or should have been reimbursed. Under Labor Code Section 2802(c), you can also recover attorney fees, making it economical to pursue even moderate claims.

⚠ Penalties for Non-Reimbursement

While LC 2802 itself does not provide for statutory penalties like waiting time penalties, employers who fail to reimburse expenses face significant potential liability.

Available Remedies

Remedy	Amount	Legal Basis
Unreimbursed Expenses	Full amount of necessary expenses	LC 2802(a)
Interest	10% per year from when due	LC 2802(b)
Attorney Fees	Reasonable fees for enforcement	LC 2802(c)
Wage Statement Penalties	$50-$100 per violation, up to $4,000	LC 226 (if expenses wrongly deducted)
PAGA Penalties	$100 per employee per pay period	Labor Code 2699

Class Action Exposure

Expense reimbursement violations often affect many employees with similar claims. This makes these cases attractive for class action lawsuits. Employers with systemic failures to reimburse expenses face potentially massive liability when a class is certified. Examples include:

Company-wide mileage rates below IRS standard
No cell phone reimbursement for employees required to use personal phones
Remote work policies without expense reimbursement

Attorney Fee Shifting Makes Claims Viable

Because LC 2802(c) allows recovery of attorney fees, even claims for relatively modest amounts can be pursued through litigation. Many employment attorneys will take expense reimbursement cases on contingency, knowing they can recover fees from the employer if successful.

📂 Evidence Checklist

Strong documentation is essential for a successful expense reimbursement claim. Gather these items before sending your demand letter.

Receipts and Invoices

Original receipts for all expenses claimed - keep digital and physical copies

Mileage Logs

Detailed log showing date, purpose, starting/ending location, and miles for each business trip

Cell Phone Bills

Monthly statements showing plan cost; document work call/text frequency

Internet Bills

Service statements for periods when working remotely

Equipment Purchases

Receipts for computer equipment, office supplies, furniture bought for work

Credit Card Statements

Statements showing work-related purchases if receipts unavailable

Expense Reports Submitted

Copies of all expense reports you submitted to the employer

Denial Communications

Emails or messages where employer denied or reduced your expense claims

Documentation Best Practices

Creating a Mileage Log

Date of each trip
Business purpose (client meeting, delivery, job site visit)
Starting location (office, home, previous client)
Destination (client name/address)
Odometer readings or calculated miles
Any tolls or parking incurred

Reconstructing Records

If you do not have contemporaneous records, you may be able to reconstruct your expenses using:

Calendar entries showing meetings/appointments
Email timestamps showing when you were at client sites
Google Maps timeline or phone location history
Credit card and bank statements
Testimony about typical work patterns

Employment and Policy Documents

Employee handbook - Expense reimbursement policies
Offer letter/employment agreement - Any expense terms
Remote work policy - What expenses company agreed to cover
Job description - Showing duties that require expenses
Emails about expenses - Any communications about reimbursement
Reimbursement history - Past expense reports and payments received

📝 Sample Demand Letter

Use these paragraphs as building blocks for your expense reimbursement demand letter. Customize with your specific facts and expenses.

Opening - Expense Reimbursement Demand

I am writing to formally demand reimbursement for business expenses I incurred during my employment with [COMPANY NAME]. Under California Labor Code Section 2802, employers are required to indemnify employees for all necessary expenditures incurred in the discharge of their duties. You have failed to reimburse me for $[TOTAL AMOUNT] in necessary business expenses, and I demand immediate payment.

Employment Background

I was employed by [COMPANY NAME] as a [JOB TITLE] from [START DATE] to [END DATE / present]. My job duties required me to [describe duties that required expenses - e.g., travel to client sites, use personal cell phone for work calls, work remotely using personal equipment and internet]. Throughout my employment, I incurred necessary business expenses that have not been fully reimbursed.

Mileage Expenses

My job required regular travel to [client sites/job locations/multiple offices] using my personal vehicle. During my employment, I drove approximately [NUMBER] business miles. The IRS standard mileage rate for [YEAR] is [RATE] cents per mile, which represents a reasonable estimate of actual vehicle operating costs. [Your company paid only X cents per mile / Your company provided no mileage reimbursement]. The unreimbursed mileage expense totals $[AMOUNT].

Cell Phone / Internet Expenses

I was required to use my personal cell phone for work purposes, including [work calls, emails, text messages with clients/coworkers, accessing work applications]. Under Cochran v. Schwan's Home Service (2014), employers must reimburse employees for work use of personal cell phones even when the employee has an unlimited plan. My monthly cell phone cost is $[AMOUNT]. A reasonable estimate of work use is [X]%, resulting in unreimbursed expenses of $[AMOUNT] over [TIME PERIOD].

Home Office / Remote Work Expenses

During my employment, I was required to work remotely [full-time / X days per week]. To perform my job duties, I incurred the following unreimbursed expenses:

- Home internet service (work portion): $[AMOUNT]
- Computer equipment: $[AMOUNT]
- Office supplies: $[AMOUNT]
- [Other equipment/furniture]: $[AMOUNT]

These are necessary expenses required to perform my job duties from home.

Legal Basis and Penalties

California Labor Code Section 2802(a) requires employers to indemnify employees for all necessary expenditures incurred in the discharge of their duties. Under Section 2802(b), unreimbursed expenses accrue interest at 10% per year. Additionally, Section 2802(c) provides for recovery of attorney fees incurred in enforcing these rights. Your failure to reimburse these necessary business expenses violates California law.

Itemized Demand Summary

Based on the foregoing, I demand reimbursement for the following expenses:

Unreimbursed Mileage: $[AMOUNT]
Cell Phone (Work Use): $[AMOUNT]
Home Internet (Work Use): $[AMOUNT]
Equipment/Supplies: $[AMOUNT]
Other Expenses: $[AMOUNT]
Interest at 10% per annum: $[AMOUNT]

TOTAL AMOUNT DUE: $[TOTAL]

Closing - Deadline and Consequences

I demand full payment of $[TOTAL AMOUNT] within fourteen (14) days of the date of this letter - by [DEADLINE DATE].

If I do not receive full payment by this date, I will pursue all available legal remedies without further notice, including: (1) filing a claim with the California Labor Commissioner; (2) filing a civil lawsuit; and (3) seeking recovery of the full amount owed plus interest and attorney fees as provided by California Labor Code Section 2802. Given the attorney fee provision in LC 2802(c), I am prepared to litigate this matter if necessary.

Full Sample Demand Letter

[YOUR NAME]
[Your Address]
[City, CA ZIP]
[Your Email]
[Your Phone]

[DATE]

VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED
AND VIA EMAIL TO: [employer email]

[EMPLOYER/COMPANY NAME]
Attn: [Owner/HR Director/Payroll]
[Company Address]
[City, CA ZIP]

Re: Demand for Expense Reimbursement - California Labor Code Section 2802

Dear [EMPLOYER NAME]:

I am writing to formally demand reimbursement for business expenses incurred during my employment with [COMPANY NAME], as required by California Labor Code Section 2802.

EMPLOYMENT BACKGROUND

I was employed as a [JOB TITLE] from [START DATE] to [END DATE]. My job duties required me to [describe duties requiring expenses]. Throughout my employment, I incurred necessary business expenses that have not been reimbursed.

UNREIMBURSED EXPENSES

1. Business Mileage: [X] miles at IRS rate of $[RATE]/mile = $[AMOUNT]
[Less any partial reimbursement received: -$[AMOUNT]]
2. Cell Phone (Work Use): $[AMOUNT]/month x [X] months x [X]% work use = $[AMOUNT]
3. Home Internet (Work Use): $[AMOUNT]/month x [X] months x [X]% work use = $[AMOUNT]
4. Equipment/Supplies: $[AMOUNT] (see attached receipts)

Subtotal of Unreimbursed Expenses: $[AMOUNT]
Interest at 10% per annum: $[AMOUNT]

TOTAL: $[AMOUNT]

LEGAL BASIS

California Labor Code Section 2802(a) requires employers to indemnify employees for all necessary expenditures incurred in the discharge of their duties. Under Cochran v. Schwan's Home Service (2014), this includes reimbursement for personal cell phone use for work purposes. Section 2802(b) provides for interest at the judgment rate, and Section 2802(c) allows recovery of attorney fees.

DEMAND

I demand payment of $[TOTAL AMOUNT] within fourteen (14) days - by [DEADLINE DATE]. If I do not receive payment by this date, I will pursue all legal remedies including filing a claim with the Labor Commissioner and/or a civil lawsuit seeking the full amount owed plus attorney fees under LC 2802(c).

Please contact me at [EMAIL/PHONE] to arrange payment.

Sincerely,

_________________________
[YOUR NAME]

Enclosures:
- Mileage log
- Cell phone bills
- Receipts for equipment/supplies
- Expense calculation worksheet

👥 When to Hire an Expense Reimbursement Attorney

Expense reimbursement claims under LC 2802 are usually straightforward, but some situations benefit from legal help.

Handle It Yourself When:

✓ Clear Expenses

You have receipts and records for straightforward business expenses the employer acknowledges you incurred.

✓ Standard Mileage

Your claim is mainly mileage reimbursement with a clear log of business trips.

✓ Small Amount

Total unreimbursed expenses are under $2,000-3,000 - small claims may be efficient.

✓ No Other Claims

Expense reimbursement is your only issue - no overtime, misclassification, or other wage claims.

Hire an Attorney When:

⚠ Significant Home Office Setup

You were required to work from home and incurred substantial equipment, internet, and phone costs.

⚠ Multiple Employees Affected

The company has a policy of not reimbursing expenses that affects many workers - class action or PAGA may apply.

⚠ Combined With Other Claims

You also have unpaid wages, overtime, or misclassification claims - stacking maximizes recovery.

⚠ Large Vehicle Expenses

You used your personal vehicle extensively and employer's mileage rate was below IRS rates or nonexistent.

⚠ Employer Disputes Necessity

The company claims expenses weren't required or were personal - legal argument about "necessary" expenses.

⚠ Independent Contractor Status

You were classified as 1099 but believe you should have been an employee entitled to reimbursement.

Benefits of Attorney Representation

Contingency fees: Attorneys may take larger expense claims on contingency
Fee-shifting: Under LC 2802, prevailing employees can recover attorney fees
Penalty stacking: Add waiting time penalties (LC 203) and wage statement penalties (LC 226)
Class action potential: Company-wide expense policies can create class claims
Proper calculation: Ensure all reimbursable expenses are included and properly valued
Litigation leverage: Represented claims resolve faster

Not Sure If You Need an Attorney?

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Contingency Representation Available

Many employment attorneys work on contingency for expense reimbursement claims, especially when combined with other wage claims.

🔗 Related Templates

These related demand letter templates may also be helpful for your situation.