36 Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) Seyfarth Shaw LLP | www.seyfarth.com defendant argued that Section 2802 allows any method to reimburse employee expenses so long as the employer does, in fact, reimburse the employee for the full value of all expenses actually and necessarily incurred on the job. The California Supreme Court in Gattuso, a case handled by Seyfarth Shaw, largely sided with the defendant. Gattuso agreed that an employer could choose among various alternative methods to reimburse employee mileage, including: (1) tracking the actual costs to the employee for necessary fuel, insurance, depreciation, and service, and reimbursing that amount; (2) paying the employee a lump sum payment each month so long as the lump sum actually covered all necessary mileage expenses; (3) paying a per-mile rate, such as the IRS mileage rate; or (4) increasing the salespersons’ commission rate with the extra commissions being devoted to cover the employees’ expenses.173 Gattuso did set some limits, however. For one, Gattuso held that, pursuant to Labor Code section 2804, the employer and employee could not agree to waive the right to reimbursement, so the employee was entitled to reimbursement of all necessary expenses.174 As such, if an employee offered a fixed expense allowance or an enhanced commission rate, the employer would violate Section 2802 to the extent that payment did not, in fact, cover all the employee’s necessary expenses.175 Gattuso also established a requirement that the employer must specify to the employees any portion of the employees’ wages that is intended to cover expense reimbursement. For example, if two percentage points of a 10 percent commission is intended to cover expenses, Gattuso suggested that the employer would have to make this fact known to employees to comply with Section 2802. Gattuso also stated that, going forward, the employer would be required to identify the portion of the wage payments that was allocated to expenses on the employees’ itemized wage statements (issued pursuant to Labor Code section 226(a)).176 Although Gattuso clarified that only necessary expenses require reimbursement—as opposed to any expense that is incurred in the course of performing work—Gattuso did not provide much detailed guidance on how to distinguish a necessary expense from an unnecessary one. In discussing how an employer and employee would decide whether mileage expenses were truly necessary, however, Gattuso suggested that it would be an individualized inquiry that could vary markedly from one employee to another: 173 Id. at 568-71, 574. 174 Id. at 569-570. 175 Id. at 570-71. 176 Id. at 574, n.6, 575-76.
RkJQdWJsaXNoZXIy OTkwMTQ4