I work as a service plumber for a company that sends me a schedule every morning via e-mail or fax. They typically route me to four service calls daily, six days a week. I've been employed with this company for about two months and I use my own truck to get to their job locations and pay for my own gasoline. The owner of the company said that part of our service fee, or $10 was to help pay for gasoline to get to the location. The problem is two-fold:

In two months I have put over 5,000 miles on a brand new truck driving to their job locations.

The $10 they pay me for the gas to a location is part of my payroll and taxed.

I'm not sure whether they have a straight picture regarding the actual expenses, but besides the 5,000 miles in two months, I have spent $1,412 in gasoline driving to their service calls. The $10 per call doesn't even come close to the actual expense and then I get cheesed on having the reimbursement taxed as part of my wages. Do I have any recourse agianst this employer for the actual expenses?

DK

California Labor Code Section 2802(a) requires an employer to indemnify his or her employee for all necessary expenditures and 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. Labor Code Section 2802(c) defines “necessary expenditures and losses” as all reasonable costs. Labor Code Section 2804 expressly prohibits a waiver of these rights.

In recent years, these requirements have been the subject of increasing litigation. In a unanimous decision earlier this month, the CA Supreme Court helped clarify things by holding an employer does not have to reimburse expenses separately, but may cover them by paying higher wages or salaries. It also gave employers flexibility to use different reimbursement methods. However, the court made clear that whatever method is used must “fully reimburse the employees for all expenses actually and necessarily incurred.” If you are so inclined, you can access the Supreme's Court's decision here http://www.courtinfo.ca.gov/opinions/documents/S139555.PDF

If you have not been fully reimbursed for your business expenses, you can file a claim with California's Division of Labor Standards Enforcement (DLSE) http://www.dir.ca.gov/dlse/HowToFileWageClaim.htm

The $10 they pay me for the gas to a location is part of my payroll and taxed.


The $10 is taxable because it fails the "accountable plan" tests. All expense reimbursement is taxable unless it can be shown that certain specific tests are passed. More information on this can be found at IRS Publication 463 Travel, Entertainment, Gift, and Car Expenses. In theory you have the possibility of claiming unreimbursed business expenses on your tax returns.

The basic rules are that to be a non-taxable reimbursement, the expense must be substantiated, have a demonstrated business purpose, be reasonable, and that any excess amounts must be returned. Collectively this is why expenses tend to be reimbursed on Expense Reports forms, and that any payments made without following expense reimbursement guidelines tends to be taxable wages to the employee.