Why do some employers cut corners with employee wages, reimbursement of costs to employees, and, especially, minimum wage? In a recent case, one employer appeared to do all three of those things and paid a big price on appeal. (Vasquez v. Franklin Management Real Estate Fund, Inc., (2013) 222 Cal.App.4th 819.)

Mr. Vasquez worked as a maintenance technician for his employer Franklin. Franklin required Vasquez to drive an average of thirty miles a day to pick up materials and go to various job locations during Vasquez’s work shift. Vasquez claimed that Franklin refused to reimburse him for his mileage. Vasquez only made $10 per hour. After subtracting the mileage reimbursement from his daily gross pay, Vasquez said that he only made about $7.94 per hour, less than minimum wage. Vasquez said that under those circumstances, he had to quit. In his lawsuit, Vasquez sued for the unreimbursed driving expenses and for wrongful discharge, among other things.

The Court found that Vasquez had alleged a supportable claim for wrongful constructive discharge because the unreimbursed expenses reduce his effective hourly rate below minimum wage. The Court also said that a simple claim for unreimbursed expenses that did not cause an employee’s wages to dip below minimum wage would normally not provide a foundation for wrongful constructive discharge. However, since Vasquez could claim that his employer did not pay him minimum wage, the fact that he quit was a wrongful constructive discharge in violation of fundamental public policy, namely, the failure to pay at least minimum wage.

Assuming Vasquez can prove he was not reimbursed for his driving expenses, he would be entitled to get them reimbursed in his lawsuit under Labor Code § 2802. That code section requires employers to reimburse employees for out of pocket expenses that benefit the employer. However, according to the Court, the failure to reimburse appears not to be a violation of a public policy that would allow for a wrongful constructive discharge. Vasquez’s minimum wage claim provided an adequate public policy violation to allow him to quit and claim a wrongful discharge.

Employers should always reimburse employee expenses. The law requires it. However, the penalties can be much greater if a failure to reimburse an employee for out of pocket business expenses drives that employee’s wages below minimum wage. The take home point: DON’T MESS WITH MINIMUM WAGE!

S. Ward Heinrichs, Esq.
Employment Law Office of Ward Heinrichs
4565 Ruffner Street, Suite 207
San Diego, CA 92111
858-292-0792
(858) 408-7543 (fax)