The issue of reimbursable expenses is often a hot topic amongst employees and their employers. While it seems obvious, for example, that an employee who uses his personal car to perform a work ‘errand’ will be reimbursed for his mileage, it is not often so cut and dry. What about the technician who buys his own truck, the gardener who purchases his own tools, or the production worker who purchases his own uniform? Are these reimbursable expenses for the employee? One of the most common alleged wage and labor violations involves disgruntled employees claiming they were not properly reimbursed for business expenses.
The Fair Labor Standards Act (FLSA) establishes minimum wage and overtime pay for employees in the private sector and in Federal, State, and local governments. Additionally, the FLSA requires that employers pay an employee’s wages finally and unconditionally. If an employee is required to return some portion of wages—whether directly or indirectly (such as through purchasing his own supplies, gas, etc…)—and that “kickback” puts the employee’s hourly rate below the minimum wage, then the employer has violated the FLSA’s minimum wage requirement.
A kickback as defined in this employment scenario is triggered in one of two ways:
1. through deductions from the employee’s wages to pay for an expense that was for the benefit of the employer; or
2. by failing to reimburse an employee for those expenses.
Not surprisingly, the FLSA kickback rule comes up quite often in cases involving delivery drivers who use their own vehicles and with delivery service apps on the rise, this is an issue that many California employers cannot choose to ignore. Anytime an employee uses a personal vehicle for company business, employers need to pay close attention to whether the expenses the employee bears by doing so puts him or her below the minimum wage.
To avoid a FLSA kickback lawsuit, employers would be well-advised to remain mindful of business expenses for employees who make at or near the minimum wage. To discuss your business’s business expense policy, contact experienced business attorney Drew Pomerance today.
