The Employer’s Obligation to Indemnify under Section 2802
California Labor Code section Section 2802 provides, in pertinent part,
“(a) 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.
[¶] . . . [¶] (c) For purposes of this section, the term ‘necessary expenditures or
losses’ shall include all reasonable costs, including, but not limited to, attorney’s
fees incurred by the employee enforcing the rights granted by this section.”
Section 2802 thus requires an employer to indemnify an employee who is
sued by third persons for conduct in the course and scope of his or her
employment, including paying any judgment entered and attorney’s fees and costs
incurred in defending the action. (Jacobus v. Krambo Corp. (2000)
78 Cal.App.4th 1096, 1100; Douglas v. Los Angeles Herald-Examiner (1975)
50 Cal.App.3d 449, 461; Grissom v. Vons Companies, Inc. (1991) 1 Cal.App.4th
52, 57; Plancarte v. Guardsmark (2004) 118 Cal.App.4th 640, 647; Los Angeles
Police Protective League v. City of Los Angeles (1994) 27 Cal.App.4th 168, 177.)
As long as the employee is acting within the scope of his or her employment, the
right to indemnity is not dependent upon a finding that the underlying action was
unfounded. (Jacobus v. Krambo Corp., supra, at pp. 1100-1101; but see O’Hara
- Teamsters Union Local # 856 (9th Cir. 1998) 151 F.3d 1152, 1158.)
The elements of a section 2802, subdivision (a) cause of action, as
delineated by the statutory language, are: (1) the employee made expenditures or
incurred losses; (2) the expenditures or losses were incurred in direct consequence
of the employee’s discharge of his or her duties, or obedience to the directions of
the employer; and (3) the expenditures or losses were necessary. The second
element, at issue here, is met if “the conduct defended against was within the
course and scope of employment.” (Jacobus v. Krambo Corp., supra,
78 Cal.App.4th at p. 1101; Devereaux v. Latham & Watkins (1995)
32 Cal.App.4th 1571, 1583.) “In determining whether for purposes of
indemnification an employee’s acts were performed within the course and scope
of employment, the courts have looked to the doctrine of respondeat superior.
[Citations.] [¶] Under that doctrine, an employer is vicariously liable for risks
broadly incidental to the enterprise undertaken by the employer — that is, for an
employee’s conduct that, in the context of the employer’s enterprise, is ‘not so
unusual or startling that it would seem unfair to include the loss resulting from it
among other costs of the employer’s business. [Citations.]’ [Citations.]”
(Jacobus v. Krambo Corp., supra, at p. 1101; Plancarte v. Guardsmark, supra,
118 Cal.App.4th at p. 648; Devereaux v. Latham & Watkins, supra,
32 Cal.App.4th at pp. 1583-1584.) An employee’s conduct may fall within the
scope of his or her employment “even though the act does not benefit the
employer, even though the act is willful or malicious, and even though the act may
violate the employer’s direct orders or policies.” (Jacobus v. Krambo Corp.,
supra, at p. 1102.)
Whether an employee’s acts are within the scope of employment is
ordinarily a question of fact, but may be resolved as a question of law when the
material facts are undisputed and no conflicting inferences are possible. (Farmers
Ins. Group v. County of Santa Clara (1995) 11 Cal.4th 992, 1019; Jacobus v.
Krambo Corp., supra, 78 Cal.App.4th at p. 1103.)