The surge in remote work arrangements had led to questions about the kinds of expenses for which California employers are responsible and which they aren’t.
The trend of remote work was already climbing before the pandemic hit, with 43 percent of workers saying they worked from home at least some of the time. According to the Pew Research Center, about 60 percent of workers say their jobs can be done from home all or most of the time. Most were already working from home before the pandemic. Currently, more than than half of workers who have a physical job site say they are choosing to work remotely.
Employers have become more open to telework where possible – not the least of which because it saves them all kinds of expenses. Not only are they saving on commercial real estate expenses, there’s increased productivity (fewer distractions and less tardiness and absenteeism), fewer workers’ compensation claims, broader talent pools to choose from, and higher employee retention rates.
But to what extent are employers required to cover in-home office expenses for remote employees?
As noted by the California Employers Association, California Labor Code 2802 clearly obligates employers to reimburse employees for “all necessary expenditures and losses” that are incurred in the course of carrying out their duties.
Reimbursements are limited to “reasonable” costs – meaning there’s some room for interpretation. In the 2014 case of Cochran v. Schwan’s Home Service, Inc., a California appellate court ruled employers that require workers to use their personal cell phones for work should pay a reasonable percentage of their cell phone bill – even if the worker has an unlimited data plan. However, there is no clear rule for what’s considered a “reasonable” contribution. In general, the idea is that while you may be entitled to reimbursement for purchase of a laptop, you aren’t necessarily guaranteed full reimbursement if you spring for a higher-end model.
Recently, California employees for Amazon.com Inc. sought class action status on behalf of some 7,000 workers who plaintiffs say were unlawfully denied home office expense reimbursements. Reuters reported the class action classification was denied (the federal judge finding failure to show the employer had a company-wide policy of failing to reimburse employees for internet, cell phones, and other costs). Roughly 600 of the 7,000 workers were reimbursed an average of $66. Individuals may still be able to pursue claims, but with a potential payout that low, it could be cost-prohibitive.
Similar cases involving other California employers have settled out-of-court. For instance, companies like IBM and Fox Broadcasting Co. agreed as part of settlement deals to pay remote workers a monthly stipend of about $85 to cover home office expenses.
The sort of home office expenses for which employers should expect to pay may include:
- Usage of personal cell phones.
- Home office equipment, such as lap tops, printers, etc.
- Virtual communication services, such as a work email, work calendar, Zoom accounts, etc.
Courts have in the past ruled that employees don’t necessarily need to submit requests for reimbursements because employers should recognize that the core functions of the job incur certain necessary costs. A number of home office reimbursement lawsuits are still pending that raise questions about expenses that aren’t as clear-cut, such as furniture and use of physical space.
Another gray area is whether reimbursements are required for employees who voluntarily work from home, as opposed to those who are required to do by the employer or due to government orders (as was the case during COVID lockdowns). Employers on this end argue that if a furnished office space is available to employees – yet they voluntarily choose not to use it – then the company shouldn’t be responsible for covering at-home office expenses. However, our Los Angeles employment lawyers would argue that such reimbursements are still reasonable because the employee is still using those tools for the employer’s benefit.
Contact the employment attorneys at Nassiri Law Group, practicing in Newport Beach, Riverside and Los Angeles. Call 714-937-2020.
The Latest News on Expense Reimbursements, July 27, 2022, By Giuliana Gabrial, H.R. Compliance Director, California Employers Association