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Can a Full-Time Employee Deduct Business Expenses?
Deducting business expenses isn't just for individuals who are self-employed. Taxpayers classified as employees may also deduct many of their unreimbursed business expenses.
To deduct workplace expenses, your total itemized deductions should be greater than the standard deduction. You must also meet "the 2% floor," which means the total of the expenses you deduct must be greater than 2% of your adjusted gross income.
Also Read: Labor Code 4850
Labor Code § 2802 Reimbursement Claim Elements
To prevail on a 2802 reimbursement claim, employees must demonstrate that:
- They incurred necessary expenditures;
- While in the performance of their duties;
- The employer knew or should have known of the expenditures; and,
- The employer did not exercise due diligence toward reimbursement.
What is Labor Code § 2802 Penalties?
A claim for expenses can be filed with a Labor Commissioner who is authorized to investigate the complaint. Labor Code § 2802 provides for the commissioner to impose civil penalties on the employer for failure to pay. The penalty for the first failure is $100.00. For each subsequent violation, the penalty is $250.00.
Related Article: Is California a Right-to-Work State?
Employee Business Expenses Examples
Common examples of expenses that you might incur as part of your job include:
- Tools and supplies
- Business travel
- Professional organization dues
- Work clothes and uniforms
- Educator expenses
- Armed forces reservists
- Fee-basis state or local government officials
- Qualified performing artists
What is the Statute of Limitations on Code 2802?
An employee's claim under Labor Code Section 2802 for reimbursement of business expenses starts on the date the employee incurs said expense. A 3-year statute of limitations applies to claims for reimbursement of business expenses because it is a liability created by statute.
What Cannot be Claimed as a Business Expense?
Anything to do with personal activities or personal spending is considered to be a non-deductible expense. Political contributions, commuting costs, and any gifts over $25 are also exempt as business expenses. It might seem like certain expenses are business-related, but many times they're not.
Does the IRS Ask for Proof of Business Expenses?
In most cases, you must provide documentary evidence (i.e. receipts, canceled checks, bills) to support your expenses. Additional evidence is required for travel, entertainment, gifts, and auto expenses.
Related Articles:
- New Labor Laws for California in 2023
- What is a Statute of Limitations?
- Requirements for a Work Permit in California
FAQs
Can I receive reimbursement for mileage if I use my personal vehicle for work-related travel?
Yes, if you use your personal vehicle for work-related travel, you are entitled to reimbursement for mileage under Labor Code Section 2802. The reimbursement rate is typically based on the IRS standard mileage rate.
What are my rights if my employer denies my reimbursement request?
If your employer denies your reimbursement request, you have the right to file a claim with the California Division of Labor Standards Enforcement (DLSE) or take legal action in court. An employment lawyer can help you understand your rights and options.
Can I recover attorney’s fees if I sue my employer under Labor Code Section 2802?
Yes, if you successfully sue your employer under Labor Code Section 2802, you may be entitled to recover attorney’s fees and court costs in addition to the reimbursement for the expenses incurred.
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