California: Employers Are Responsible for Work from Home Expenses

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APPLIES TO

All Employers with Employees in CA

EFFECTIVE

July 11, 2023

  

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Quick Look

  • Employer responsibility for employee expenses turns on whether they were incurred in direct relation to the employee’s job duties.

Discussion

In Thai v. International Business Machines Corp., the California Court of Appeal stated that employers are liable for employee expenses that are a direct result of fulfilling their job duties, regardless of whether the reason for incurring the expenses comes from the employer directly.

Here, as a result of the Governor’s March 2020 Executive Order mandating that residents stay home because of the COVID-19 pandemic, employees began working from home. This shift in work location caused employees to incur various expenses, such as internet access, telephone headsets and service, and computers and computer accessories. An employee claimed he was not properly reimbursed for these work expenses. Labor Code § 2802(a) requires an employer to reimburse necessary expenses incurred in “direct consequence” of employees’ duties, or when following employer directions. The employer claimed that because the order to work remotely came from the state, the employer did not cause the employee to incur the expenses.

The court ultimately said that Section 2802 does not require the employer to be the direct cause of the expenses, but that reimbursable expenses must be directly related to the employee’s duties. Notably, the work the employees performed was for the employer’s benefit; had the employees been working at the employer’s premises, the costs at issue would have been covered by the employer.

Action Items

  1. Review expense reimbursement practices to ensure compliance.
  2. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase