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Cover employee expenses–or prepare for court

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in Compensation and Benefits,Human Resources

Now is a good time to make sure your employees are being properly reimbursed for expenses they incur while performing their jobs. That’s especially true if they are low-wage workers.

The problem: If they aren’t reimbursed for those expenses, their pay may fall below minimum wage. And if that’s the case, they can quit and sue, alleging constructive discharge.

Recent case: Jorge worked as a maintenance technician, making $10 per hour for a 40-hour week. After about a month on the job, his supervisors began telling him to use his own truck for work-related errands, such as going to the hardware store to buy items needed for repairs at the apartments the company managed. Before long, he was driving about 30 miles per day for the company’s benefit, all while using his own vehicle.

Jorge began asking for reimbursement for the gas, maintenance and repairs on his truck but never got a penny.

He quit and sued, alleging that he had been owed about $330 per month based on 55 cents per mile. He said that after subtracting $330 from his pay, he had been making less than the California minimum wage.

The employer argued that Jorge had no reason to quit and that it hadn’t terminated him.

The court disagreed. It said making a well-paid employee pay for some expenses like gas and maintenance might not be a compelling reason to quit. But when the expenses effectively meant the employee wasn’t making minimum wage, that’s a different story. The lawsuit moves forward. (Vas­­quez v. Franklin Management, No. B245735, Court of Appeal of Cali­­fornia, 2nd Appellate District, 2014)

Final note: Have a reasonable reimbursement policy for when employees use their own vehicles. Use the IRS’ standard per mile rate. For 2014, that’s 56 cents per mile.

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