A Guide to Expense Reimbursement for California Employees

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Sometimes employees need to pay out of pocket for their employer’s business expenses. But that doesn’t mean you should be left footing the bill.

The good news for California workers is that the state has strong laws to protect you. Employers are required to reimburse employees for all necessary work-related expenses. This applies regardless of the expense size.

This article explains your reimbursement rights. We’ll focus on rules found in California’s Labor Code.

We’ll start by explaining these key state laws and reimbursement requirements. We’ll also cover what steps to take if your employer refuses proper reimbursement or if they delay payment unreasonably.

Finally, we’ll answer common questions about business expense reimbursements in California.

Table Of Contents
  1. The General Rule of Expense Reimbursement for California Employees
  2. The Timing and Process of Business Expense Reimbursement in California
  3. Commonly-Asked Questions about Business Expense Reimbursement in California

The General Rule of Expense Reimbursement for California Employees

Employees sometimes pay for work costs from their own pocket. These are business, not personal expenses, and California law says employees shouldn’t ultimately bear these costs.

Employers generally must reimburse employees for all reasonable and necessary costs incurred while performing job duties. This rule comes from California Labor Code section 2802. It covers expenses resulting directly from your work or from following employer instructions.1

What does “necessary” mean in this context? Generally, it means reasonable and required for the job.

The law interprets necessary expenses broadly. It covers a wide range of potential work-related costs.

Some might seem minor, like photocopies or required parking fees. Others can be substantial, like purchasing necessary equipment or paying for work travel.

Here are common examples of business expenses California employers typically must reimburse:

Personal cell phones: If you use your personal phone to make work calls, send emails, or even use work-related apps, your employer should cover your cell phone bill.
Work uniforms: If your job requires specific apparel (like a uniform or protective gear) not suitable for general wear, the employer typically must provide or pay for it.
Vehicle costs or mileage: Using your personal vehicle for required work tasks (beyond your normal commute) usually requires reimbursement. This is often calculated using the standard IRS mileage rate.
Travel expenses: Necessary costs for business travel must generally be reimbursed. Examples include airfare, lodging, rental cars, fuel, and reasonable meal costs while traveling on business.
Home office expenses: If you’re required or expected to work from home, necessary home office expenses are often reimbursable. This can include home internet costs, necessary computer equipment, printers, or essential office supplies.

The increase in remote work has highlighted home office expense issues. Defining necessary business expenses in a home setting can sometimes involve more complex questions.

California courts, however, often interpret reimbursement obligations broadly to protect employees, including those working remotely.2

For employees specifically required by the employer to work from home, the employer might even need to reimburse a reasonable percentage of your rent, mortgage, or utilities directly related to the workspace use.

Are you unsure which work-from-home expenses your employer should reimburse? Consulting a California employment lawyer is the best way to get clarity on your specific situation and rights.

When are work-related expenses not reimbursable?

While California law broadly requires expense reimbursement, some important exceptions exist.

One key exception involves public employees. A recent court case addressed this issue directly.3 The court found that public employers aren’t required to reimburse employees under the California Labor Code.

Do you work for the state or a local government agency in California? It’s wise to clarify reimbursement policies before incurring significant business expenses. Don’t assume automatic reimbursement under § 2802.

Another key exception relates to employer knowledge. Your employer generally must know about an expense to be required to reimburse it, or they must have reasonable grounds to know about it.

This means employees usually need to submit expense reports. Report necessary expenses promptly and accurately. If you wait too long (beyond a reasonable time), you might lose your right to reimbursement for that expense.4

After submitting expenses, follow up if payment isn’t received. If your employer continues to ignores proper, timely requests, legal action might be necessary.

Other situations might also limit reimbursement:

Non-necessary or voluntary expenses: Was the expense not truly necessary for performing your job duties? Was it purely voluntary or just for personal convenience? Reimbursement likely isn’t required, unless your employer indicated the expense was necessary.
Employer-provided resources: Did your employer provide adequate tools or resources for the job (like a company laptop or phone)? If you chose to use your own personal device or service instead, reimbursement might not be required.
Personal use: If you buy something for both personal and work use, your employer might only have to reimburse you for the portion related to work.

Sometimes employment agreements might attempt to limit certain expense reimbursements. But contract clauses cannot override California law. Agreements cannot waive your right to reimbursement for necessary business expenses. Such clauses are likely unenforceable.

Taxes and Accountable Plans for Reimbursed Expenses

Are business expense reimbursements considered taxable income? The short answer is usually no.

Reimbursements aren’t taxed as income if the employer uses a properly structured system. This system must meet IRS requirements for an Accountable Reimbursement Plan. (This generally involves substantiating expenses and returning any excess payments).5

What if an employer doesn’t have an accountable plan or if reimbursements are made outside such a plan? Then reimbursement payments are typically treated as taxable wages.

This means the payments become part of your gross income. They are subject to income tax withholding and payroll taxes (Social Security and Medicare). The reimbursed amounts will likely be included and reported on your year-end Form W-2.

To avoid tax surprises, it’s wise to confirm your employer’s process. Ask HR or your manager if they use an accountable plan for reimbursements. This is especially important if you expect significant work-related expenses.

The Timing and Process of Business Expense Reimbursement in California

California requires employers to reimburse necessary business expenses proactively. While the law doesn’t set an exact deadline, payment should happen within a reasonable timeframe after you report the expense.

What if your employer fails to reimburse you properly or promptly?

First, submit a clear written request for reimbursement. Always keep copies of your requests and supporting documents for your own records.

Strong documentation is crucial evidence if a dispute arises over expenses. Try to keep meticulous records, such as:

Receipts: Original or clear copies for all out-of-pocket expenses (supplies, tools, travel, meals, etc.).
Mileage Logs: If seeking reimbursement for personal vehicle use, keep detailed logs including dates, mileage, destinations, and business purpose.
Bills: Copies of relevant personal bills (like cell phone or internet) if seeking partial reimbursement for required business use. Note the justification for the business portion if possible.
Authorizations: Any emails, memos, or other communications showing your employer authorized or required the expense.
Submission Records: Dated copies of the expense reports or reimbursement forms you submitted to your employer.
Follow-Up Communications: Notes or copies of any emails or messages exchanged with your employer regarding the status of your reimbursement request.

If your employer ignores reasonable and timely requests, consulting an employment lawyer is usually the best next step.

A lawyer can explain your options and help pursue the money owed. They might help file a wage claim with the California Division of Labor Standards Enforcement (DLSE). Or they might advise filing a lawsuit directly in court.

Many employment lawyers offer free consultations. They also often work on contingency, meaning you pay no fee unless they recover funds for you.

If your reimbursement claim succeeds in court, California law (Labor Code § 2802(c)) allows recovery of:6

The amount of your business expenses: The full value of necessary work expenses the employer failed to pay back.
Interest on those expenses: Interest typically accrues from the date the expense should have been reimbursed.
Your attorney’s fees: The court may order the employer to pay your reasonable attorney’s fees and related court costs incurred in pursuing the claim.

Act quickly due to filing deadlines. Statutes of limitations limit your time to take legal action. For expense reimbursement claims under Labor Code § 2802, the deadline is generally 3 years from when the reimbursement was due or denied.

In some limited situations, California’s Unfair Competition Law (UCL) might allow claims from up to four years in the past.7 However, relying on the 3-year deadline for reimbursement claims is usually safest.

What if the failure to reimburse is a wider problem affecting numerous employees? A systematic failure might also support a group claim under the California Labor Code Private Attorneys General Act (PAGA). PAGA seeks civil penalties for widespread violations. You can also read our dedicated article on PAGA claims. 

Need help with unreimbursed business expenses in California? Our attorneys understand these laws and can explain your options. Click the button above (desktop) or below (on mobile) to schedule a free, confidential consultation.

Commonly-Asked Questions about Business Expense Reimbursement in California

Question: What law covers employee reimbursements in California?
Answer: The primary state law is Labor Code Section 2802. Its core purpose is to prevent employers from passing their operating costs onto their employees. Understanding this law is key to protecting your right to reimbursement for work-related expenses.
Question: What types of expenses does my employer have to reimburse me for?
Answer: California requires employers to reimburse all necessary expenditures or losses. These expenses must be incurred by the employee as a direct consequence of their job duties. The scope is intentionally broad under the law. It covers tangible costs like required supplies and intangible costs like necessary data usage on a personal phone.
Question: How long do I have to recover expenses from my employer?
Answer: The time limit (statute of limitations) depends on the legal basis for your claim. You generally have 3 years to file a claim seeking reimbursement under Labor Code § 2802. California’s Unfair Competition Law (UCL) has a four-year deadline and might apply in some situations, but remedies under the UCL can be more limited. Acting within the 3-year Labor Code deadline is typically the clearest path.
Question: Does my employer have to reimburse me for the cost of my home office space?
Answer: Reimbursement for the space itself (like a portion of rent or mortgage) is a nuanced area of law. Clearer expenses like necessary internet service or required equipment usually must be reimbursed. Reimbursement for the cost of the physical space is less certain under current case law. It’s more likely required if the employer mandates you work from home, rather than it being solely your voluntary choice.

Citations

  1. Cal. Lab. Code § 2802 (go back)
  2. See Williams v. Amazon.com Servs. LLC, No. 22-CV-01892-VC, 2022 WL 1769124 (N.D. Cal. June 1, 2022) (go back)
  3. See Krug v. Board of Trustees of the California State University, Cal.App.5th (Apr. 3, 2025). (go back)
  4. See Stuart v. Radioshack Corp. (N.D. Cal. 2009) 641 F. Supp. 2d 901. (go back)
  5. 26 U.S.C.A. § 62, I.R.C. § 62 (go back)
  6. Cal. Lab. Code § 2802(b) (go back)
  7. California Bus. & Prof. Code § 17200 et seq. (go back)

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