Employer Reimbursement Policies Must Reimburse Employees for Expenses Incurred

On February 8, 2021, the United States Court of Appeals for the Ninth Circuit held that alleged “reimbursement payments” an employer made to its employees were really “wages,” and accordingly, such amounts had to be factored into the employees’ “regular rate of pay” for purposes of calculating overtime under federal law, and the California Labor Code. The plaintiffs in Clarke v. AMN Services, LLC worked as clinicians and were paid a designated hourly wage, and an amount denominated a weekly “per diem benefit.” But said amount was paid without regard to whether expenses were actually incurred on a given day. Monies paid to employees as a flat-sum or as an automatic expense reimbursement that do not reimburse employees for actual expenses incurred, may be deemed wages, leaving an employer open to claims that it failed to compensate its employees for all hours worked at their regular rate of pay, and that it has not reimbursed them for expenses actually incurred.