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California Labor Laws and How They Put Your Organization at Risk

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Keeping The Mobile Workforce In Motion What CA 2802 Says California Labor Code Section 2802(a) looks simple enough: (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. In fact, it's the simplicity of the language that makes Section 2802 so powerful and significant. Because California's reimbursement statute does not identify specific types of business expenses, a broad array of expenditures could fall under the scope of reimbursements. Why Section 2802 Matters Section 2802 has been on the books since 1937. It became a hot topic for any company with mobile workers seventy years later in Gattuso v. Harte-Hanks Shoppers. We've previously written about the case and the resulting financial impact on the employer. In Gattuso, the California Supreme Court made clear that automobile expenses are included in the "necessary expenditures" covered by Section 2802, and that employees should expect to be reimbursed for driving in pursuit of business (previous cases invoking Section 2802 focused on reimbursement for job-related tools and equipment, not mileage, according to an analysis by law firm Seyfarth Shaw LLP). Section 2802 goes on to make non-compliance particularly costly. Subsection (b) says that successful plaintiffs will receive damages with accrued interest from the date of the original expenditure, and subsection (c) requires employers to reimburse costs associated with a successful lawsuit, including attorney's fees. Furthermore, Section 2804 voids any waiver or agreement designed to circumvent the required reimbursements. In light of these provisions and added costs for failing to reimburse employees properly, it is wise for employers to err on the side of caution and reimburse employees in full for any job-related mileage. California's Nationwide Significance California is the nation's most populous state, and what happens in California does not always stay in California. You might not have workers in the Golden State today, but the workers and working conditions of Californians tend to be of keen interest to the rest of the nation. California's size, complexity, and politically active citizenry have long made it a legislative proving ground. Laws and standards that start in California oen spread to other states or become policy at the federal level. Indeed, other states have followed California's lead on topics ranging from environmental controls to data breach notifications.

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