CDF Wage and Hour Task Force – Monthly Tips – Update on Post-Pandemic Voluntary Work-From-Home Agreements & Reimbursements for Work-At-Home Expenses

Topics: Court Decisions, Personnel Policies and Procedures, Wage & Hour Issues

Recent developments raise questions about post-pandemic voluntary work-from-home agreements and reimbursements for work-at-home expenses. This is our monthly blog providing California employers with wage and hour compliance tips and best practices.

When the pandemic initially hit, most California employers scrambled to continue operations while complying with mandatory stay-at-home orders. Many employers acted quickly to set up employees to work from home and may have overlooked whether that triggered the duty to reimburse for certain business expenses associated with working from home, i.e., internet usage, cell phone usage, personal computer usage, etc. For some employers, it may have been unclear whether the employer was required to pay expenses employees may have incurred by working at home as a result of Governor Newsom’s stay-at-home order. Was the cause the government or was the employer the cause? Recently, the California Court of Appeal unequivocally answered the question – the employer. More specifically, the employees’ performance of work duties for the employer. In Thai v. International Business Machines Corporation, relying on statutory language alone, the Court determined that an employer is required to reimburse an employee “for all necessary expenditures …incurred by the employee in direct consequence of the discharge of his or her duties.” The Court determined that the Governor was not an intervening cause, excusing reimbursement, based on the stay-at-home order. The Court reasoned that what matters is whether an employee incurs expenses “in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer.” The reimbursement statute does not state that the employer must reimburse only for expenses directly caused by the employer. This is an important distinction. The obligation to reimburse turns on whether expenses were incurred due to the performance of the employee’s duties as well as other factors.  

Now, fast forward to the post-pandemic era to which employers have been adjusting. For some employers, there is an expectation that employees will be permitted to work from home to some degree. Indeed, employees commonly request a hybrid work-from-home schedule – even though the employer maintains a workplace with all necessary equipment and supplies at the ready for employees to perform their duties. In other words, employees chose (if not demand) to voluntarily work from home. Now, who is responsible for work-related business expenses? Does the voluntary choice to work from home instead of at the employer-provided workplace require reimbursement for expenses incurred by performing duties at home? The Thai decision suggests that it does. As a result, employers who have implemented voluntary work-from-home agreements that shift some expenses associated with such work to the employee should carefully consider the risks associated with those agreements. Employers would also be well served to carefully consider accommodating work-from-home requests and the potential risks associated with accommodating the same in light of Thai. It seems that the work-from-home era is here to stay and there is a balance to be struck. However, it requires careful consideration and extra steps to protect against failure to reimburse claims down the road. While allowing work-from-home schedules has become somewhat of the norm and, for some employers, a necessity for employee recruiting and retention, it adds another tricky road for California employers to navigate fraught with landmines.  

To get answers to these questions and more, be sure to register for our upcoming complimentary webinar on “Wage & Hour Legal Update and Best Practices for California Employers” scheduled for August 22, 2023, from 10:00 a.m. to 11:15 a.m. (Pacific Time) HERE. Authors of this blog, Nancy “Niki” Lubrano and Brian Cole will cover a wide range of critical topics related to wage and hour laws in California, including recent legal developments, emerging trends, and compliance requirements.