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California employers must reimburse expenses for certain remote workers, lawyers say

Months after workers left the office to work from home, they are racking up out-of-pocket costs. And experts say businesses should not ignore the issue of who is paying those expenses.

Global Workplace Analytics surveyed employers Sept. 16–25 and found 82% of employers believe they should absorb home office costs.

“Before COVID, employees who worked from home generally saw it as a privilege and didn’t expect their employer to cover their home office expenses. The survey shows that sentiment has shifted during the pandemic,” Kate Lister, president of Global Workplace Analytics.

While this might seem like an expensive proposition, Global Workplace Analytics sites a positive return on investment.

“A typical employer saves $11,000/year for every full-time employee that works from home 50% of the time. That's over $1.1 million/year for every 100 half-time telecommuters. Making a one-time investment of $1,000 to provide an employee with home office furniture will pay for itself in a little over a month,” the report states.

The reimbursement is only an obligation to a company if remote work is mandatory, according to California law.

Though employers maybe coming around to the idea of paying home office costs for remote workers, California law has always been clear.

California Labor Code Section 2802 says an employee is entitled to be reimbursed “by his or her employer 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."

A company would not have to pay for home office expenses if it reopens its doors and the employee chooses to stay at home. The reimbursement is only an obligation to a company if remote work is mandatory, according to the law.

Employees have made complaints to regulators about not being paid for expenses related to working from home.

The state Department of Industrial Relations handles disputes involving employee–employer reimbursable expenses.

In 2019, there were 3,384 unreimbursed expense claims filed in California. This year, through Oct. 31, 6,634 claims have been filed. Of those, 4,790 were filed by drivers for Lyft and Uber as part of AB5. The Labor Commissioner’s Office said it cannot provide a breakdown of the type of unreimbursed expenses people are claiming.

But the law also is clear that expenses are not equal. While coffee and other goodies might have been provided by an employer, they would not be deemed necessary under the letter of the law no matter how strongly one argued caffeine is a necessity.

Computers, printers, paper supplies, pens, internet, and cell phones are all necessary items companies should be paying for if they have mandated an employee work from home, according to legal experts. It’s also possible that a portion of an employee’s gas and electric bills should be reimbursable expenses.

“What I have seen and what I recommend is if you want to control the costs, you make up a supply packet and provide it to the employee,” said Valorie Bader, an attorney with the Welty, Weaver & Currie law firm in Santa Rosa.

Bader is also the chair of the labor employment section of the Sonoma County Bar Association. She suggests when an employee needs more supplies, they ask for it, and another shipment goes out.

The problem is that many employers, especially smaller companies without a human resources department, do not know all of their obligations.

“Very few employers are aware of reimbursable expenses,” Bader said.

Fanny Hansen with Danadjieva Hansen Architects in Tiburon has not volunteered to pay home office expenses for her six employees nor has anyone asked her to do so.

She has offered flexible work hours which allows some staff members to be at their home office desks in the middle of the night, allowing them to deal with personal issues during the day like making sure children are online for school. And they also benefit by not having to commute.

“I think people don’t want to commute anymore. I think the majority of people are happy with it,” Hansen said of remote work.

She noted that they are saving money by not being in a car every day, and have at least two hours more for personal time per day. She said for her the important thing is the work gets done no matter the hour of day someone chooses to do it.

At a much larger company like Jackson Family Wines which has about 1,200 employees, remote workers now have their internet bill paid for. The Santa Rosa-based company allowed these employees to take home all the computer equipment they need to do their job. The winery was providing a cell phone stipend pre-pandemic.

Dawn Ross, attorney with Carle, Mackie, Power & Ross in Santa Rosa, said, “The law definitely favors employees over employers in these circumstances.”

She added that since March when workers were sent home, “Most employers are paying a flat fee for employees using their own things at home like $50 or $100 instead of breaking down expenses. We have done email alerts to our clients to be aware of this and to have it on their radar.”

This general business law firm with 20 attorneys has thousands of clients all over the state, with most being in the greater Bay Area. With most workers at Carle, Mackie, Power & Ross being at home for the foreseeable future, the law firm not only advises others how they should legally conduct business, but is also dealing with these unprecedented times with its personnel.

“We send every employee a mid-month surprise gift. We deliver birthday cakes, a card and balloons on their birthday,” Ross said. “We are all trying to come up with ways to keep our employees connected and morale up.”

This expense is paid for from regular lunches that had been the norm when everyone was in the office.

Bader emphatically said, “Human resources departments should be proactive so they are not sued.”

She encourages her clients, which number in the thousands throughout the North Bay, to have a remote worker agreement with employees. This is something her law firm has with its nearly 20 employees.

The agreement is to protect the employer in the event a complaint or lawsuit is filed. Each should be unique to the individual and should be flexible. If employees demonstrate expenses are greater, then the employer needs to address that issue, Bader said.

Other criteria in determining what is reimbursable is if the request is reasonable. Bader said demanding payment for the highest level of internet service over basic speed could be an unreasonable request.

Bader and Ross predict 2021 will see a number of lawsuits, perhaps class-action suits, being filed on behalf of employees who claim they were not fairly or adequately compensated for expenses related to working from home.

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