# Employee Expense Reimbursement in California[^about] California Labor Code sections 2802 and 2804 govern necessary business expenses, reimbursement agreements, and recovery of unpaid costs. This note covers employee expense reimbursement in California. It addresses work costs, personal phones, agreements, and recovery of unpaid expenses. See the [expense reimbursement practice guide](/practice-guides/expense-reimbursement). ## Must an employer in California reimburse employee business expenses? {#reimbursement-duty} **Short answer.** California employers must reimburse employees for all necessary expenditures or losses directly caused by their work duties or employer directions. [^ca-2802-duty] Section 2802(a) does not make prior authorization a condition of that duty. [^ca-2802-duty] ## Which business expenses must a California employer reimburse? {#covered-expenses} **Short answer.** California employers must cover necessary expenditures or losses directly caused by employee duties or employer directions. [^ca-2802-covered] The statute defines those expenditures to include reasonable costs, including attorney’s fees incurred to enforce the right. [^ca-2802-costs] An expense outside the duty's necessity and direct-consequence terms does not meet the statutory test. [^ca-2802-covered] ## Must a California employer reimburse remote-work costs such as home internet or a personal phone? {#remote-work-costs} **Short answer.** A California employer that requires an employee to make work calls on a personal cell phone must reimburse a reasonable percentage of the phone bill. [^ca-cochran-required][^ca-cochran-phone] In *Cochran v. Schwan's Home Service, Inc.* [^ca-cochran-plan], the court treated it as irrelevant whether the employee changed phone plans to accommodate the work calls. Section 2802(a) does not name a device or a place of work, so its test of necessary expenditures in direct consequence of job duties also governs other remote-work costs, such as home internet. [^ca-2802-remote] ## Can an offer letter or expense policy in California make the employee bear business expenses? {#waiver} **Short answer.** Under Labor Code § 2804, a contract or agreement, express or implied, in which a California employee waives the reimbursement rights in § 2802 is null and void, so an offer letter cannot shift necessary business expenses to the employee. [^ca-2804-waiver] *Gattuso v. Harte-Hanks Shoppers, Inc.* [^ca-gattuso-method] permits an employer to reimburse through increased salary or commissions if the reimbursement portion can be identified. An agreed lump sum still must fully reimburse necessary expenses. [^ca-gattuso-lump] ## What happens in California if an employer does not reimburse expenses? {#deadlines-and-remedies} **Short answer.** California reimbursement awards carry interest from the date the employee incurred the necessary expense or loss. [^ca-2802-interest] Necessary expenditures or losses also include reasonable enforcement costs, including attorney’s fees. [^ca-2802-fees] The cited provisions do not set a reimbursement deadline. [^ca-2802-interest] ## How does federal minimum-wage law limit unreimbursed expenses in California? {#federal-floor} **Short answer.** Under 29 C.F.R. § 531.35, an employer that requires an employee to supply tools of the trade for the job violates the Fair Labor Standards Act in any workweek in which the employee's cost cuts into the minimum or overtime wages due. [^fed-531-35-tools] The regulation rests on the rule that wages count as paid only when they are paid free and clear, with no kick-back to the employer. [^fed-531-35-free-and-clear][^fed-531-35-kickback] The federal rule is a floor, not a general duty to reimburse. It is breached only when an employer-required cost pushes the week's pay below the minimum or overtime wages due. [^fed-531-35-tools] [^about]: By Steven Obiajulu, J.D. Published by [openagreements.org](https://openagreements.org). Last reviewed 2026-09-30. License: CC BY 4.0. Steven Obiajulu, J.D. is admitted in New York, not California. This article synthesizes California primary law and is not legal advice from a California-admitted attorney. This article is for informational purposes only and does not create an attorney-client relationship. Source excerpts and linked materials belong to their owners. CC BY 4.0. Cite as Steven Obiajulu, *Employee Expense Reimbursement in California*, OpenAgreements (last updated September 30, 2026), https://openagreements.org/practice-guides/expense-reimbursement/us/california. [^ca-2802-duty]: **Cal. Lab. Code § 2802** — "(a) 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, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful." *Cal. Lab. Code § 2802(a)* [^ca-2802-covered]: **Cal. Lab. Code § 2802** — "(a) 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, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful." *Cal. Lab. Code § 2802(a)* [^ca-2802-costs]: **Cal. Lab. Code § 2802** — "(c) For purposes of this section, the term ‘necessary expenditures or losses’ shall include all reasonable costs, including, but not limited to, attorney’s fees incurred by the employee enforcing the rights granted by this section." *Cal. Lab. Code § 2802(c)* [^ca-cochran-required]: **Cochran v. Schwan's Home Service, Inc., 228 Cal. App. 4th 1137 (2014)** — "If an employee is required to make work-related calls on a personal cell phone, then he or she is incurring an expense for purposes of section 2802." *Cochran v. Schwan's Home Service, Inc., 228 Cal. App. 4th 1137 (2014).* [^ca-cochran-phone]: **Cochran v. Schwan's Home Service, Inc., 228 Cal. App. 4th 1137 (2014)** — "Thus, to be in compliance with section 2802, the employer must pay some reasonable percentage of the employee’s cell phone bill." *Cochran v. Schwan's Home Service, Inc., 228 Cal. App. 4th 1137 (2014).* [^ca-cochran-plan]: **Cochran v. Schwan's Home Service, Inc., 228 Cal. App. 4th 1137 (2014)** — "It is irrelevant whether the employee changed plans to accommodate worked-related cell phone usage." *Cochran v. Schwan's Home Service, Inc., 228 Cal. App. 4th 1137 (2014).* [^ca-2802-remote]: **Cal. Lab. Code § 2802** — "(a) 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, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful." *Cal. Lab. Code § 2802(a)* [^ca-2804-waiver]: **Cal. Lab. Code § 2804** — "Any contract or agreement, express or implied, made by any employee to waive the benefits of this article or any part thereof, is null and void, and this article shall not deprive any employee or his personal representative of any right or remedy to which he is entitled under the laws of this State." *Cal. Lab. Code § 2804* [^ca-gattuso-method]: **Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal. 4th 554 (2007)** — "We conclude that an employer may satisfy its statutory reimbursement obligation by paying employees enhanced compensation in the form of increases in base salary or increases in commission rates, or both, provided there is a means or method to apportion the enhanced compensation to determine what amount is being paid for labor performed and what amount is reimbursement for business expenses." *Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal. 4th 554 (2007).* [^ca-gattuso-lump]: **Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal. 4th 554 (2007)** — "But, under section 2804, the existence of an agreement between an employer or employee regarding a lump-sum reimbursement payment would not relieve the employer of the statutory obligation to pay full reimbursement, nor would it bar an employee challenge to a lump-sum payment as being insufficient under section 2802 to provide full reimbursement." *Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal. 4th 554 (2007).* [^ca-2802-interest]: **Cal. Lab. Code § 2802** — "(b) All awards made by a court or by the Division of Labor Standards Enforcement for reimbursement of necessary expenditures under this section shall carry interest at the same rate as judgments in civil actions. Interest shall accrue from the date on which the employee incurred the necessary expenditure or loss." *Cal. Lab. Code § 2802(b)* [^ca-2802-fees]: **Cal. Lab. Code § 2802** — "(c) For purposes of this section, the term ‘necessary expenditures or losses’ shall include all reasonable costs, including, but not limited to, attorney’s fees incurred by the employee enforcing the rights granted by this section." *Cal. Lab. Code § 2802(c)* [^fed-531-35-tools]: **29 C.F.R. § 531.35** — "For example, if it is a requirement of the employer that the employee must provide tools of the trade which will be used in or are specifically required for the performance of the employer's particular work, there would be a violation of the Act in any workweek when the cost of such tools purchased by the employee cuts into the minimum or overtime wages required to be paid him under the Act." *29 C.F.R. § 531.35* [^fed-531-35-free-and-clear]: **29 C.F.R. § 531.35** — "Whether in cash or in facilities, ‘wages’ cannot be considered to have been paid by the employer and received by the employee unless they are paid finally and unconditionally or ‘free and clear.’" *29 C.F.R. § 531.35* [^fed-531-35-kickback]: **29 C.F.R. § 531.35** — "The wage requirements of the Act will not be met where the employee ‘kicks-back’ directly or indirectly to the employer or to another person for the employer's benefit the whole or part of the wage delivered to the employee." *29 C.F.R. § 531.35* For repeat use, install the skill: `npx skills add open-agreements/open-agreements` (lawyer-reviewed agreement templates + 50-state practice guides).