Cal-Peculiarities: How California Employment Law is Different 2022 Edition

234 | 2022 Cal-Peculiarities ©2022 Seyfarth Shaw LLP  www.seyfarth.com commission rate must ensure that payments actually cover all necessary expenses . 340 S econd , Gattuso held that the employer must provide some method or formula to identify the amount of the combined employee compensation payment that is intended to provide expense reimbursement. Gattuso also stated that, going forward, employers must identify the portion of wages allocated to expenses on itemized wage statements . 341 Another decision has held what Gattuso implies—that California employers must indeed indemnify employees for their reasonable and necessary business expenses. In that case, FedEx delivery drivers, arguing that they were employees, not independent contractors, sued FedEx under Section 2802 for reimbursement of work-related expenses . 342 T he Court of Appeal affirmed the trial court’s finding that the drivers were employees for purposes of Section 2802 and that FedEx had failed to indemnify the drivers fully for their business expenses. Duty to solicit requests for reimbursement? A federal district court has held that employers can be liable for business expenses even when the employee has failed to submit required expense reports. The court reasoned that the law focuses not on whether an employee requests reimbursement of expenses but rather on whether the employer either knows or has reason to know that the employee has incurred a reimbursable expense. If the employer has that actual or constructive knowledge, then it must exercise due diligence to ensure that the employee is paid . 343 Cell-phone expense reimbursement. The Court of Appeal has held that an employer that required its customer service managers to use their personal cell phones for business must reimburse the managers for a reasonable percentage of their cell phone bills . 344 T he trial court had denied certification of a proposed class of 1,500 managers, reasoning that a class trial was unmanageable in light of individualized issues as to whether particular class members paid their own phone bills and whether they had service plans that provided for unlimited minutes. In either case, the trial court ruled, the employer’s practice of requiring personal cell-phone use might not have caused an employee to incur any actual expense. The Court of Appeal, however, reversed the denial of class certification, because it disagreed with the trial court’s interpretation of Section 2802. The Court of Appeal held that Section 2802 always requires reimbursement when an employee relieves the employer of a business expense, regardless of whether the employee actually incurred an extra expense in doing so: “Otherwise, the employer would receive a windfall because it would be passing its operating expenses onto the employee. Thus, to comply with Section 2802, the employer must pay some reasonable percentage of the employee’s cell phone bill. ” 345 The Court of Appeal left for another day the enormous practical difficulties involved in calculating individual damages. Nor did the Court of Appeal address other issues (such as tax issues and issues of the regular rate of pay) that would arise if employers respond to the Court of Appeal’s ruling by over-paying employees for their actual expenses. Employer-required clothing. In 2019 the Court of Appeal held that a restaurant need not pay for the slip- resistant safety shoes the employer required, because the employees did not have to buy shoes of a particular brand, style, or design, and could wear these basic, non-uniform wardrobe items outside of work. The shoes therefore did not qualify under Labor Code section 2802 as “necessary expenditures ... incurred by the employee[s] in direct consequence of the discharge of [their] duties. ” 346 Commuting expenses. In a 2020 case involving travel time, the Court of Appeal held that the same factors governing whether service technicians are entitled to wages for their commuting time also govern whether they are entitled to reimbursement for their commuting mileage expenses. The ultimate question was whether they were required to transport company tools and equipment in their personal vehicles that were so voluminous that the service technicians were unable to use their commutes for their own personal purpose s. 347