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socrateaser, Lawyer
Category: California Employment Law
Satisfied Customers: 38895
Experience:  Retired (mostly)
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One of my employees was employed on 9/28. To incentivize him

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One of my employees was employed on 9/28. To incentivize him I agreed to give him a full month salary for the month of September. 0n 10/2 he decided to resign and is asking me to reimburse him for the expenses that he has done during the month of September. He calculated the expenses according to a formula that is not in line with the company policy for reimbursing expenses. This company policy has been communicated to him verbally.

Do I need to pay to him the claimed expenses as per the calculation 5that he provided?

Cal. Labor Code 2802 provides, "An employer shall indemnify his or her employee for all necessary expenditures or 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, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful."

The courts have interpreted this code section to permit parties to an employment agreement to determine how expenses will be reimbursed. However, the law requires that nothing less than full reimbursement for all expenses is sufficient.

Therefore, while a formula created by either party could be used to estimate expenses, if that formula underestimates an employee's actual expenses, then Section 2802 is violated, and an employee has a legal claim for the difference.

If the employee has quit, then as an employer, you are obligated to pay for all actual expenses incurred during the employee's scope of employment. Correspondingly, the employee is obligated to provide proof of actual expenses incurred (receipts, mileage, etc.).

As long as you stand ready to perform your end of the obligation, you can await the employee's performance. But, under Section 2804, you cannot bargain for an alternative settlement and release, because any such attempt is "null and void," as against public policy.

Please let me know if my answer is helpful and if I can provide further assistance.

And, thanks for using!
Customer: replied 3 years ago.
My company is based in MA and the employee is hired in NH. Would there be significant difference from what you have said in these states?
Your question was posted in the California Employment Law category. Which is why I used California law. Give me a few minutes, and I'll try to determine what NH law is on this issue (n.b., most states have no specific law in this area, and parties simply agree to whatever they can negotiate).

Thanks for your patience.
I'm back.

The law of the jurisdiction where the employee engages in his or her principal labor activites controls in the resolution of any labor-related dispute.

NH RSA 275:57 is remarkably similar to Cal. Labor Code 2802 (which as I mentioned, is quite surprising). While the NH law does not use the term "actual expenses," it does say that "an employee who incurs expenses in connection with his or her employment and at the request of the employer...shall be reimbursed for the payment of the expenses within 30 days of the presentation by the employee of proof of payment."

The result is the same as previously described: actual expenses are reimbursable, and the employee is obligated to produce proof of those expenses before the employer is obligated to provide reimbursement."

So, the answer here is the same as before: neither of your formulas is valid. Proof of actual expenses is required by the law.

Hope this helps.
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