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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 Furthermore, in states without 2802-like provisions, scholars are already looking at ways in which the spirit of the law could be seen to reflect protections akin to Section 2802. For example, Louisiana has no labor law or statute directly comparable to California's Section 2802. But it does have Civil Code 2298, which governs enrichment without cause and compensation – recalling our discussion of the Cochran cell phone case above. A person who has been enriched without cause at the expense of another person is bound to compensate that person. The amount of compensation due is measured by the extent to which one has been enriched or the other has been impoverished, whichever is less. Though not as clear-cut as Section 2802, one scholar writes that the Louisiana Code could be seen as applying where an employer is enriched by passing along operating expenses to employees, thereby enriching itself and impoverishing its employees in the eyes of the law. "[O]ne could potentially combine Civil Code article 2298 and the reasoning in Cochran to create a blueprint for an employee reimbursement claim in Louisiana," writes Taylor Crousillac in the Louisiana State University Law Review. Because this concept of "unjust enrichment" is a long-standing equitable legal theory enshrined throughout our nation's state civil codes, this line of thinking could be applicable well beyond Louisiana. This is not a slam-dunk theory for employee plaintiffs, however the reasoning in Cochran gives new credence to a broader application of a fairness analysis in reimbursements. Precision Matters, and Lawsuits Are Serious Our experience shows that inaccurate, ballpark reimbursement policies can cost companies hundreds of dollars per month per employee in incorrect over-reimbursement. At the same time, as described in this article, the risks of significant penalties for under-reimbursement in violation of state or federal laws are very real. A Domino's Pizza franchisee recently settled federal wage and hour claims by drivers for just under $1 million in Hines v. Cowabunga Inc. The Gattuso decision cost Harte-Hanks Shoppers nearly $7 million. There are many other examples of seven-figure settlements when vehicle expenses aren't properly managed. The Gattuso case established that California businesses can choose reimbursement models, including a fixed-rate or lump-sum reimbursement, as long as they disclose exactly how much of an employee's paycheck was earmarked for mileage. But this flexibility comes with a risk: if the employee documents that the amount they are being reimbursed falls short of the actual expenses, the employer will be found liable for the difference, plus interest and possible additional damages. More precise methods like Fixed and Variable Rate (FAVR) reimbursement – also permissible under Gattuso – help avoid this potential problem. By including both fixed costs like car insurance and depreciation with variable costs including maintenance, oil, and tire wear, employers have the best chance to ensure accurate (and defensible) reimbursements that account for all the unique costs employees incur when driving their vehicles for business. With interest in fair and transparent reimbursement growing in the wake of Cochran, this is the perfect time to take control of your own program. Motus, LLC | Two Financial Center Boston, MA 02111 (888) 312-0788 www.motus.com

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