Litigating California Wage & Hour and Labor Code Class Actions

System, Inc., 96 three drivers brought a class action against FedEx, contending that for the
limited purpose of their entitlement to reimbursement for work-related expenses, they were
employees, not independent contractors, and thus were entitled to reimbursement of
business expenses under Section 2802. Although FedEx maintained that payments it
made as part of its operating agreement with the drivers provided reasonable
compensation for expenses, the trial court disagreed and ordered FedEx to pay $5.3 million
for under-reimbursed expenses.
The Court of Appeal affirmed in part and reversed in part. The court affirmed the trial
court’s central finding that the drivers were employees for purposes of Section 2802 and
that FedEx had failed to indemnify the drivers fully for their business expenses as required
by Section 2802. The Court of Appeal held that although the drivers were entitled to
recover their out-of-pocket expenses and work accident insurance premiums, they were not
entitled for reimbursement for the cost of purchasing trucks to perform the job. In essence,
the court held that an employer may require employees to furnish their own cars to perform
a job without indemnifying the employees for the cost of such purchases. The court’s
reasoning also suggested that employers may be allowed to require employees to
purchase other items as a pre-condition of employment, such as cell phones or computers,
and that the requirement to furnish such items as a condition of employment does not
violate the reimbursement requirements of Section 2802. 97
B. Reimbursement for Uniforms Under the Wage Orders
Separate from Section 2802, several Wage Orders state that when uniforms, tools, or
equipment are required by the employer, or necessary to perform the job duties, they must
be provided by the employer. 98 For example, employees may be required to wear a
company’s logo shirt while on duty. The Wage Orders define “uniform” to include “apparel
or accessories of distinctive design or color.” 99 The IWC has explained, however, that the
employer’s obligation to pay for uniforms does not require the employer to pay for an
employee’s work clothes when the employee has only a broadly-defined dress code, such
as a dark suit and a tie for lawyers. 100
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97
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154 Cal. App. 4th 1 (2007).
DLSE Bulletin 84-7 states that “an applicant for employment may be required, as a condition of employment, to furnish
his [ ] own automobile or truck to be used in the course of employment, regardless of the amount of wages paid.”
Under Section 2802, “an employer who requires an employee to furnish his [ ] own car or truck to be used in the course
of employment would be obligated to reimburse the employee for the costs necessarily incurred by the employee in
using the car or truck in the course of employment.”
See, e.g., Wage Order 7-2001 § 9.
See, e.g., Wage Order 7-2001 § 9(A).
See IWC Order No. 4-98, Statement as to Basis (stating that employers may “specify basic wardrobe items which are
usual and generally usable in the occupation, such as white shirts, dark pants and black shoes and belts” and may
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