Supreme Court Grants Review of Unpublished Class Action Ban Opinion
Brinker Meal and Rest Period Argument Reset

Gattuso Argument Set For September 6

Labor Code § 2802 requires employers to indemnify employees for necessary expenditures incurred in discharge of their duties. What if an employer doesn't want to be bothered with that requirement, and instead, "ballparks" the usual costs and increases its workers' wages accordingly? In October 2005, in Gattuso v. Harte-Hanks Shoppers, Inc., the Second District Court of Appeal held that Section 2802 does not preclude employers from paying increased salaries or commissions "in lieu of" reimbursement for actual expenses, at least with respect to the expenses at issue in that case (automobile expenses). Review was granted by the Supreme Court, and after a long wait, the Supreme Court has scheduled oral argument for Thursday, September 6, 2007, at 9:00 a.m., in San Francisco.

To offer a little bit of background, Labor Code § 2802(a) provides:

An employer shall 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, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful.

In Gattuso, the plaintiffs brought a class action on behalf of themselves and other employees of defendant Harte-Hanks Shoppers, Inc. (Harte-Hanks) seeking indemnification under Labor Code § 2802 for expenses incurred in using their personal automobiles in the discharge of their employment duties. The trial court denied certification of the case as a class action after also ordering that section 2802 permits an employer to pay increased salaries or commissions instead of reimbursing the employee for actual automobile expenses incurred. Once the class was denied certification, the employees appealed and the Court of Appeal affirmed both orders, agreeing with the trial court’s interpretation of section 2802 and determining that the trial court did not abuse its discretion in denying plaintiffs’ motion for class certification. The Court of Appeal decision was chock full of discussions of the peculiar factual and procedural quirks of the case, but the decision also involved broader questions of law applicable to any employment relationship.


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