Labor Code 2802: California Expense Reimbursement

Your personal cell phone rings all day with work calls. You drive your own car between job sites. Your home Wi-Fi carries every video meeting you sit through. If your employer has never put a dollar toward any of it, California law is almost certainly on your side.

Labor Code section 2802 requires California employers to reimburse employees for the costs of doing their jobs. It is one of the strongest — and most ignored — protections in the state's wage laws. Here is what it covers, what it is worth, and how to collect.

What Labor Code 2802 Actually Requires

The statute says 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." Read that carefully, because two words do most of the work:

• Necessary — the expense has to be reasonably required to do the job. It does not have to be pre-approved, and it does not have to appear on a company expense policy.
• Direct consequence — you spent the money because of the work, not for personal reasons.

Three details surprise most employees:

1. You cannot sign the right away. Labor Code section 2804 makes any agreement waiving section 2802 protections null and void. A handbook saying "employees are responsible for their own phone and vehicle costs" is unenforceable.
2. Interest runs at 10% per year from the date you incurred the expense.
3. Your attorney's fees are part of the recovery. Section 2802(c) treats the fees you spend enforcing the statute as a reimbursable loss — which is why these cases are economically viable even when the underlying amounts look modest.

You can read the statute yourself on California Legislative Information.

The Expenses Employers Most Often Fail to Cover

Vehicle use and mileage

If you drive your own car for work — client visits, deliveries, running between locations, bank runs — those miles are reimbursable. Commuting from home to your regular worksite generally is not.

California does not force employers to use any single formula. Under Gattuso v. Harte-Hanks Shoppers (2007), an employer may reimburse by the mile, by lump-sum stipend, or by actual cost, so long as the method fully covers what the driving actually costs you and the employer identifies which part of your pay is reimbursement rather than wages. Most employers use the IRS standard mileage rate as a practical benchmark: for 2026 the business rate is 72.5 cents per mile for January through June and 76 cents per mile from July 1 forward (current figures are posted by the IRS). A stipend that falls well below your real costs is still a violation.

Cell phone and internet

This is the most commonly underpaid category in California. In Cochran v. Schwan's Home Service (2014), the Court of Appeal held that when an employer requires an employee to use a personal cell phone for work, it must pay a reasonable percentage of the phone bill — even if the employee had an unlimited plan and paid nothing extra. The employer's savings are not the point; shifting a business cost onto the worker is.

The same logic reaches home internet, data plans, and, in many roles, a share of what you spend to keep a usable home office.

Tools, equipment, and uniforms

• Required uniforms and specialty gear are the employer's expense.
• Safety equipment the job requires is the employer's expense.
• Employees earning at least twice the state minimum wage may be required to supply the hand tools customarily used in their trade — a narrow exception, not a general rule.
• Losses can count too: a fine, a shortfall, or damage that comes with the job usually cannot be pushed onto your paycheck, and your employer cannot simply deduct it from your wages.

Remote Work: Who Pays for the Home Office?

California courts have answered this directly. In Thai v. IBM (2023), an employee sued for internet, phone, and equipment costs incurred after his employer sent staff home during the COVID-19 stay-at-home order. IBM argued the government order — not the company — caused the expenses. The Court of Appeal disagreed: what matters is whether the costs were a direct consequence of doing the job, not who prompted the arrangement.

The practical takeaway for hybrid and remote employees is that a $0 remote-work stipend is a red flag, and a token flat payment that ignores what you actually spend can still fall short.

What You Can Recover, and How Long You Have

A section 2802 claim typically recovers:

• the unreimbursed expenses themselves, often reaching back years;
• 10% annual interest from the date of each expense;
• attorney's fees and costs;
• in some cases, civil penalties through a representative action, or related wage-statement and unpaid-wage claims filed alongside.

The deadline matters. A claim to enforce a statutory obligation like section 2802 generally carries a three-year statute of limitations, and a companion claim under California's unfair competition law can sometimes reach back four years. Related wage claims run on their own clocks. Because the analysis depends on when each expense was incurred and how your claim is framed, have a lawyer confirm your dates rather than assuming — a missed deadline ends an otherwise strong case.

How to Pursue It Without Blowing Up Your Job

1. Gather the paper. Phone bills, mileage logs, receipts, purchase records, and any policy or email telling you to use your own equipment.
2. Put the request in writing. A short, professional email asking to be reimbursed under Labor Code 2802 creates a record and sometimes solves the problem outright.
3. Note what happens next. Retaliating against an employee for asserting this right is separately unlawful — see our guide to workplace retaliation in California.
4. Choose a forum. You can file a wage claim with the Labor Commissioner (the California Department of Industrial Relations explains the process) or file in civil court. Which route is better depends on the size of the claim, whether coworkers are affected, and whether you signed an arbitration agreement.
5. Talk to an employment lawyer before you sign anything — especially a severance agreement or a release tied to your final pay.

Frequently Asked Questions

Does my employer have to reimburse me for my cell phone in California?

Yes, if work use is required or expected. Under Cochran, the employer owes a reasonable percentage of the bill even if your plan is unlimited and you paid nothing extra that month.

What if I never submitted an expense report?

You may still have a claim. Reimbursement is owed when the employer knows or has reason to know you incurred a necessary expense. A company can require reasonable submission procedures, but it cannot use them to escape a cost it knows you are carrying.

Is my employer required to pay the IRS mileage rate?

No. California requires full reimbursement, not a specific rate. The IRS figure is a widely accepted shortcut; if your actual costs are higher, the IRS rate alone may not be enough.

Can my employer make me sign away reimbursement or deduct costs from my pay?

No. Labor Code 2804 voids waivers, and California sharply limits deductions from wages for business losses. If money was taken out of your check for shortages, breakage, or fines, that is worth a closer look — as is how your final paycheck is handled when you leave.

Do independent contractors get reimbursed under 2802?

Section 2802 protects employees, not genuine independent contractors. But many California workers are labeled contractors when the law treats them as employees — if that describes you, start with independent contractor misclassification, because winning that issue unlocks reimbursement and much more.

Talk to a California Employment Lawyer

Unreimbursed expenses add up quietly — a few hundred dollars a month becomes tens of thousands over a few years, and the statute puts your attorney's fees on the employer's side of the ledger. MMG Law Firm represents employees across California in wage, reimbursement, retaliation, and employment law matters. The consultation is free and carries no obligation, and we handle qualifying cases on a contingency basis. If your employer has been shifting the cost of doing business onto you, contact us and we will tell you honestly what your claim looks like.