In an effort to reduce their environmental impact, many companies have taken measures such as using recycled materials or eliminating the use of plastic straws. Recently, at least one company announced that it would no longer reimburse employees for business meals that include red meat, pork, or poultry, nor serve those meats at company events – the rationale being that reducing or avoiding meat consumption is less harmful to the environment. The company stated that exceptions would be made for employees with medical or religious reasons. As this is a novel issue that impacts employee travel and expense reimbursement policies, Practical Law asked Jeffrey D. Polsky of Fox Rothschild LLP to discuss the legal and other issues raised by these types of exclusions.

Jeff serves as co-chair of the firm's Labor and Employment Department. He focuses his practice on business and employment litigation and counseling. In addition to providing advice and counsel, he represents clients in disputes relating to claims of discrimination and harassment, trade secret violations, wage and hour compliance, wrongful discharge, and breach of contract. Jeff has extensive experience in alternative methods of resolving disputes, including mediation. Jeff also handles commercial litigation matters including claims involving breach of fiduciary duty, restrictive covenants, director and officers liability, statutory violations, and other business disputes. He is a noted contributor to numerous legal publications. He is the main contributor to Fox Rothschild LLP's California Employment Law Blog, which averages over 15,000 unique visitors a month.

California requires employers to reimburse employees for all "necessary" business expenses (Cal. Lab. Code §2802).

Federal law contains no similarly explicit requirement (see California Dairies Inc. v. RSUI Indem. Co., 617 F.Supp.2d 1023, 1045 (E.D.Cal. 2009)). However, since the employer gets a tax deduction for business expenses, there is no reason not to reimburse as long as the expenses are business-related and reasonable.

California Labor Code Section 2802(a) requires an employer to "indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer…."

Again, the expense must be "necessary." For example, delivery drivers:

The expenditure must also be either:

This includes not just reimbursement for expenses, but also indemnifying employees if they get sued for actions taken in the course and scope of their employment.

Under California law, an employer that does not reimburse employees risks a lawsuit where the damages will include not just the unreimbursed expenses but the attorney's fees incurred by the employee seeking reimbursement. The employee can also ask the Labor Commissioner to cite the employer or anyone acting on the employer's behalf pursuant to Labor Code Section 2802(d). Where the practice is widespread (or just alleged to be) the claims can be brought on a class-wide basis.

Federal law does not explicitly require reimbursement. However, employees can bring a claim under the Fair Labor Standards Act if they have to pay business expenses that effectively reduce their compensation below the federal minimum wage. "Wages must be paid free and clear of impermissible deductions -- such as the costs of operating the vehicle or traveling on the road -- that would reduce pay below the federal minimum. Deductions that are impermissible when they reduce pay below the federal minimum include the cost of gas, oil, tires, repairs to the truck, tolls or the cost of food or lodging for the employees while they are traveling." (U.S. Dept. of Labor Wage and Hour Division Fact Sheet 47, revised July 2009.) In that situation, employers potentially face class-wide exposure.

In my opinion, it is legal. Assuming the employee is not a restaurant reviewer, I can think of very few jobs in which it is "necessary" to eat meat.

I'm not aware of any medical conditions or religions that make it necessary to consume meat. But if there are, employers may need to accommodate those employees.

In jurisdictions like California that require expense reimbursement, I can also envision employers facing claims if employees were not provided sufficient advanced (preferably written) notice that the employer will not reimburse expenses from business-related meals that include meat. There could be similar issues if employers refuse to reimburse employees for business meals in areas where vegetarian options are lacking.

Aside from legal exposure, I'd be concerned with how this policy is perceived by employees and the public. I assume that the policy is motivated by concern for animal rights and/or the environment. But there are risks in trying to foist your morals on employees who do not share those beliefs. If they view it as an unwarranted intrusion into their personal lives, it could become harder to recruit and retain the best workers. Also, an employer that can justify telling employees what to eat at business meals could just as easily justify telling them how to drive, what type of gas to use, and other issues that employees justifiably think they should be allowed to decide on their own.

When employees are required to use their own cell phones, tablets, or similar devices, it can be hard to know how much of the use is business-related and how much is personal. For example, if employees have phones with an unlimited plans that they sometimes use for work, can the employer argue that it doesn't have to reimburse the employee because they incurred no added expense? Under California law, the answer is "no." "[T]he employer must pay some reasonable percentage of the employee's cell phone bill." (Cochran v. Schwan's Home Service, Inc., 228 Cal.App.4th 1137 (2014)). What is reasonable will depend on the circumstances, such as how much the employee uses the device for work compared to personal use and the nature of the employee's plan.

In terms of best practices, the first step is to have a policy that is clear and detailed. The detail is necessary so that you address the variety of situations where expense reimbursement becomes an issue (including phone and data plans).

Second, in enforcing the policy, err on the side of being over-inclusive. The employer still needs to verify that the expenses are legitimate. But since these claims can result in class actions, it is not worth the time and legal exposure to haggle over small amounts that are arguably business related.

Third, someone should check with each departing employee to ensure that they have submitted and been reimbursed for all work-related expenses.

For a jurisdiction neutral employee reimbursement policy with integrated drafting notes, see Standard Document, Travel and Business Expense Reimbursement Policy.