By Susan Bishop and Alec Barcelos
California requires employers to reimburse employees for expenses taken on to perform their regular work duties. Aside from the various tools, equipment, or travel-related expenses employees may face as a reality of the job, the reimbursement rule also applies to expenses associated with personal items used for work. For example, California courts have ruled that employers must compensate employees for using a personal cell phone or vehicle to complete their work responsibilities. See, Cochran v. Schwan's Home Serv., Inc. (2014); Gattuso v. Harte-Hanks Shoppers, Inc. (2007).
However, recent trends in workplace flexibility have given rise to hybrid, or even fully remote workspaces. This newfound flexibility can complement many places of employment but may require office-space equipment like computers, high-speed internet, or other jobsite-specific tools. So how should employers approach reimbursement for their employees working in hybrid or work-from-home formats? What about during situations where the government mandates individuals to stay at home?
Simple. Employers should continue to reimburse their remote employees in much the same way they reimburse their in-person employees.
Functionally, the law requires that all equipment, tools, or other operating costs taken at the employees’ expense, whether at home, in the office, or out in the field, must be reimbursed by their employer so long as they are necessary to perform their work duties.
The Court of Appeal recently gave further clarification on an employer’s legal obligation to reimburse employees in light of external factors, like the government-mandated stay-at-home order issued during the COVID-19 pandemic. In Thai v. International Business Machines Corporation, the defendant employer, IBM, informed several thousand of its employees to continue working their regular jobs from home after Governor Newsom’s March 19, 2020, order took effect. (July 11, 2023). IBM did not pay for internet access, telephone service, telephone headsets, or computers and related accessories its employees needed to work remotely. Following the government mandate, IBM believed it was under no obligation to reimburse its employees because the costs its employees incurred from working remotely were not directly caused by IBM, but instead a consequence of IBM’s response to government orders. The Court disagreed, specifying the reimbursement law functions just the same for remote workers, whether employees work at home by choice offered by the employer, or out of compliance with a government order, because they are still working remotely for the employer’s benefit.
A key takeaway from this decision is that the law applies equally to employees working remotely, regardless of the circumstances that led to incorporating work-from-home. An employer’s obligation to reimburse employees for all expenses necessary to do their job remains true for hybrid, remote, and in-person workspaces.
If you have questions about reimbursement policies or other labor and employment matters, please contact our Labor and Employment department at 408.286.5800 or susan.bishop@berliner.com.