By Stacey Sommerhauser, SPHR, PHRca, SHRM-SCP
The courts have been busy this summer as another case was decided, this time in the area of reimbursement of expenses for employees working remotely. If you have been our client for any amount of time, you know we have long stated employers must reimburse employees for expenses incurred as a direct result of performing their job duties. More specifically the labor code states:
Labor Code section 2802(a) requires employers to compensate employees for necessary expenditures or losses incurred in direct consequence of the employees’ duties, or for the employees’ obedience to the employers’ directions.
This section of the Labor Code was designed to protect workers from bearing the costs of expenses that are incurred by workers doing their jobs in service of an employer. However, when the pandemic hit many employees transitioned from working at the office to remote work in compliance with various COVID-19 stay home orders. The question soon arose as to whether employers would have to reimburse employees for expenses (i.e., internet, phone, supplies, etc.) while working remote when the expenses are not directly caused by the employer, but some other state requirement or in this case a Governor’s order.
The California Court of Appeals decided last month in Thai v International Business Machines Corporation the employer must reimburse employees when expenses were incurred during the employees’ performance of work duties for the employer not only when expenses are caused by the employer. What this all means is that even though the Governor required employees to stay home not the employer, the expenses incurred were still a result of employees’ performing their duties.
The potential ripple effect of this decision is somewhat mindboggling. The decision suggests that if an employee voluntarily decides to continue to work remotely, and the employer allows it, even though the employer is still paying all costs to maintain a workplace and workspace, the employer must still reimburse for remote work expenses. The reasoning is that the obligation to reimburse turns on whether expenses were incurred due to the performance of the employee’s duties regardless of whether the remote work is purely voluntary. This is where we cue up our favorite phrase “no good deed goes unpunished .”
It is recommended you review your expense reimbursement obligations for all employees working fully remote or partially remote and have employees sign a Remote Work Expense Reimbursement Agreement. We also have several other forms and documents in our HR Library to assist you as you navigate this new decision.
If you have additional questions, please reach out to your HR Consultant.