California Guide · Updated 2026
California Business Expense Reimbursement (Labor Code §2802)
California is one of the strictest states on expense reimbursement: if an employee has to spend their own money to do their job, you generally have to pay it back. With remote work, this now reaches into phone and internet bills.
The rule (Labor Code §2802)
Employers must reimburse employees for all necessary expenditures incurred in the direct discharge of their job duties. Employees cannot waive this right.
Common reimbursable expenses
- Mileage and personal-vehicle use for work;
- Tools, equipment, and required uniforms;
- A reasonable percentage of a personal cell phone and home internet used for work.
Remote work
When employees work from home, a reasonable share of phone and internet costs is reimbursable even if the employee would have had the plan anyway (Cochran v. Schwan's Home Service). Other necessary home-office costs can also qualify.
How to comply
- Adopt a clear written reimbursement policy;
- Use a reasonable method — actual cost or a reasonable stipend that genuinely covers the expense;
- Reimburse promptly, and revisit stipend amounts so they keep pace with real costs.
§2802 claims are common in PAGA and class actions, and interest and attorney's fees are recoverable — so getting the policy right matters.
Need help with this?
Our HR Assistant gives cited California HR answers in seconds, backed by 45+ years of hands-on HR experience.