240 | 2023 Cal-Peculiarities ©2023 Seyfarth Shaw LLP www.seyfarth.com (such as tax issues and issues of the regular rate of pay) that would arise if employers respond to the Court of Appeal’s ruling by over-paying employees for their actual expenses. Employer-required clothing. In 2019 the Court of Appeal held that a restaurant need not pay for the slipresistant safety shoes the employer required, because the employees did not have to buy shoes of a particular brand, style, or design, and could wear these basic, non-uniform wardrobe items outside of work. The shoes therefore did not qualify under Labor Code section 2802 as “necessary expenditures ... incurred by the employee[s] in direct consequence of the discharge of [their] duties.”358 Commuting expenses. In a 2020 case involving travel time, the Court of Appeal held that the same factors governing whether service technicians are entitled to wages for their commuting time also govern whether they are entitled to reimbursement for their commuting mileage expenses. The ultimate question was whether they were required to transport company tools and equipment in their personal vehicles that were so voluminous that the service technicians were unable to use their commutes for their own personal purposes.359 Remote working expenses. The Covid-19 pandemic has led to an increase in litigation over reimbursement of expenses incurred by employees who work remotely—such as expenses for home internet access, utilities, and the use of home office space. Courts have concluded that the reasonableness of such expenses depends in large part on whether employees had the option to use the employer’s facilities and services such as internet.360 In a recently filed class action, an employee challenged his employer’s reimbursement of only “incremental” home internet costs incurred by remote employees – i.e., only those costs above what employees would normally incur if they were not working from home. The Northern District of California declined to certify the class, citing evidence that many employees had received reimbursements of more than a “reasonable percentage” of their home internet costs, in compliance with Labor Code section 2802.361 Direct patient case workers. Legislation enacted in 2020 requires employers to reimburse employees who provide direct patient care—and applicants for such positions—for any expense or cost of employer-provided or employer-required educational programs or training, including residencies, orientations, or competency validations necessary for direct patient care employment.362 7.13.2 Special insurance status of expense claims as not “wage and hour” claims Insurance policies for employment practices liability often cover wrongful termination and discrimination claims while excluding coverage for “wage and hour” claims. In 2019 the Court of Appeal held that this policy exclusion should be interpreted narrowly, to apply only to claims involving the duration of work or pay for work. The plaintiffs sued on traditional wage and hour claims and also sued for reimbursement of business-related expenses. The defendant employer tendered its defense on the expense claim to an insurance carrier, which denied coverage. The employer then sued the carrier for breach of contract and declaratory relief. The Court of Appeal ruled against the carrier, reasoning that “wage and hour ... law(s)” are only those laws concerning duration of time worked or remuneration received in exchange for work. The Court of Appeal noted that the reimbursement statutes (Labor Code section 2800 et seq.) do not mention wages or hours and do not appear in the Labor Code sections addressing compensation or working hours. Moreover, expense reimbursement is not pay for labor or services.363
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