Today, the California Supreme Court issued the attached highly-anticipated decision, Gattuso v. Harte-Hanks Shoppers, Inc., involving an employer’s obligations to reimburse employees for expenses they necessarily incur in the discharge of their duties. The Court considered the following issue: may an employer satisfy its statutory reimbursement obligation under California Labor Code Section 2802 by paying employees increased wages or commissions instead of separately reimbursing employees for their actual expenses? The Court concluded that an employer may satisfy its statutory reimbursement obligation by paying enhanced compensation, but only if it provides “a means or method to apportion the enhanced compensation to determine what amount is being paid for labor performed and what amount is reimbursement for business expenses.” In reaching this conclusion, the Court repeatedly emphasized that Labor Code Section 2802 requires employers to fully reimburse its employees for expenses they necessarily incur in the discharge of their duties. In addition, the court noted that employers who pay enhanced compensation as a method of expense reimbursement must put in place a mechanism whereby employees can challenge the amount of the enhanced compensation or lump sum payment as insufficient.
In addition, the Supreme Court reversed the appellate court’s decision upholding the trial court’s denial of class certification. The Supreme Court directed the appellate court to consider various questions with respect to whether class certification was proper.
Gattuso v. Harte-Hanks Shoppers, Inc.
Keesal, Young & Logan Employment Group
