Fenwick Employment Brief - May 2013: Unreimbursed Expense May Result in Minimum Wage Violation, But Not a Labor Code § 450 Private Cause of Action

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In Sanchez v. Aerogroup, the plaintiff alleged that as a condition of her employment she was required to purchase at least eight pairs of shoes from her employer without reimbursement.  She asserted violations of both minimum wage laws and Labor Code Section 450, which provides that no employer may compel or coerce any applicant or employee to patronize his or her employer.  A California federal district court held that Section 450 establishes misdemeanor criminal liability, but does not authorize a civil suit by private citizens, and therefore Sanchez had no civil recourse under the statute.  However, the court also held that Aerogroup's failure to reimburse Sanchez for the shoe purchases had the effect of reducing her wages below the minimum, and therefore Sanchez could pursue a claim for minimum wage violations (both the underpaid amount plus an additional equal amount as liquidated damages). 

This case is a reminder that the failure to reimburse an employee's business expenses may not only trigger liability under California Labor Code 2802, but it may also result in a more costly minimum wage violation.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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