Non-Reimbursement of Business Expenses

Employees in California have the right to be reimbursed for all of their out-of-pocket business expenses.

All expenses must be reimbursed.  This includes cell phone use and mileage.

Does my employer need to reimburse me for the use of my cell phone? 

Under California law, when an employee must use their personal cell phone for work-related calls, an employer is required to reimburse them.   It is important to note that even when the employee has a cell phone plan with unlimited minutes or limited minutes, the reimbursement owed is a reasonable percentage of their cell phone bills.  The California Court of Appeals explained that reimbursement is always required because otherwise, the employer would receive a windfall because it would be passing its operating expenses onto the employee.

When an employee is required to use his/her personal cell phone for work purposes, the employer must pay some reasonable percentage of the employee’s cell phone bill.  It does not matter if the phone bill is paid for by a third person, or at all.  It does not matter if the employee changed plans to accommodate worked-related cell phone usage.  It does not matter if the employee’s phone is part of a family or group plan.

Does my employer need to reimburse me for mileage?

If an employer requires an employee to travel on company business, the employer must reimburse the employee for the cost of that travel.  The employer can reimburse the employee in a number of ways:

  • Reimburse the “actual expenses”:   An employer can reimburse an employee for the actual expenses incurred by separately paying the amount of automobile expenses including the actual costs of fuel, maintenance, repairs, insurance, registration, and depreciation.
  • Reimburse using a “mileage calculation”: using this method, the employee only needs to keep a record of the number of miles driven for job duties. The employer then multiplies the miles driven by a predetermined amount that approximates the per-mile cost of owning and operating an automobile. The mileage rate agreed to between the employer and employee is merely an approximation of actual expenses and is less accurate than the actual expense method.
  • Reimburse with a “lump-sum payment”: under this method, an employer can pay a fixed (monthly or weekly) amount of money for automobile expense reimbursement.  The fixed amount may take various forms and have various labels, including per diem, car allowance, and gas stipend.  The amount is generally based on the employer’s understanding of the employee’s job duties, including the number of miles that the employee typically or routinely must drive to perform those duties.  Under California law, an employer may reimburse its employees using a lump sum method, but only if the amount paid is sufficient to provide full reimbursement for actual expenses incurred.  As an employee, you have the right to challenge the amount of a lump sum payment as being insufficient to cover your mileage expenses.

Does my employer need to reimburse me for my miles driven as part of my commute?

No. Employers are not required to pay for all mileage associated with workers’ jobs. Most importantly, there is no obligation for an employer to reimburse for mileage driven commuting to or from work. The same goes for other transportation costs incurred in commuting to and from home and work.