Delta’s Legal Challenge: The High Cost of Ignoring Workplace Reimbursement Policies

By Marc Jacobs

Late last month, Delta Air Lines was on the receiving end of another class action lawsuit concerning a common workplace policy that most businesses face. In Garnett v. Delta Air Lines Inc., a Private Attorneys General Act (PAGA) representative suit, the plaintiff (Garnett) claims that the company failed to reimburse him and his colleagues for work-related use of their personal cellphones necessary to perform their job responsibilities.  

Garnett's action on behalf of all aggrieved Delta employees (estimated at more than 90,000 in 2022) alleges violations of California Labor Code § 2802, which requires that employees be reimbursed for expenditures necessary to carry out their job duties. By way of the lawsuit, it is alleged that Delta requires employees to use their personal cellphones and computers for business-related purposes without reimbursement. 

The potential liability to Delta is significant. The litigation seeks statutory penalties ($100 for the initial breach and $200 for each subsequent breach thereafter per employee,per pay period), prejudgment and post-judgment interest, litigation costs, and attorney fees. Assuming Delta has an employee count north of 90,000, the case subjects the company to hundreds of millions of dollars of aggregate exposure (estimated at as much as $468,000,000 for every year this practice persisted). 

Key Takeaway #1: Even small employers can face massive damages if found to be in violation of Section 2802. A company with only 10 employees that failed to reimburse them for the business use of personal cellphones would face upward of $52,000 in penalties (not counting prejudgment interest owed, the actual cost of reimbursement and attorneys’ fees) for each year the practice persisted.  

Key Takeaway #2: With more businesses permitting remote work, attention to business expense reimbursement policies is critical. This is especially true in the wake of the decision in a case called Thai v. IBM, in which it was determined that an employer is required to reimburse an employee “for all necessary expenditures …incurred by the employee in direct consequence of the discharge of his or her duties.”  

Key Takeaway #3: Lawsuits like the one initiated against Delta, which are entirely avoidable, illustrate how important it is for companies to have skilled employment counsel with particular experience in wage and hour compliance. 

This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.