With the rapid spread of COVID-19, and the enactment of social distancing restrictions and stay-at-home orders, many businesses have required their employees to work remotely. Transitioning employees to remote work has had some benefits for employees, such as less time on the road, greater productivity, more job satisfaction, less sickness, and more flexibility in the workday. 

Transitioning Employees to Remote Work

While transitioning to a remote workforce has enabled businesses to continue operating, it is important that employers consider various legal issues when implementing temporary work-from-home arrangements. Although remote work may reduce an employer’s operating expenses in some ways, employers are not allowed to receive a windfall by passing operating expenses to employees who are required to work from home.

Section 2802 of the California Labor Code requires that “[a]n employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.” Accordingly, employers are required to reimburse employees for reasonable and necessary expenses they incur for equipment and services necessary to work from home, such as cell phone, internet, teleconferencing software, and computer usage expenses. Reimbursement is required even in instances where their employees do not incur an additional expense. California employers should reimburse employees for a portion of their personal cell phone bill, home internet, etc., even in instances where the employee already subscribed to these services for personal use prior to working remotely.

Remote Work Reimbursement Exceptions 

Importantly, when an employee has the option to work in their employer’s office and use company equipment, but elects to work from home, the employer is not under the same obligation to reimburse for remote work expenses that are incurred solely due to an employee’s election to work remotely. However, the duty to reimburse for remote work expenses is triggered when an employer makes it mandatory to work remotely. 

Remote Work Reimbursement Best Practices 

The best practice is for employers to attempt to provide company owned equipment, such as computers and telephones to their employees, as much as possible. Employers should establish an expense reimbursement policy which considers the unique circumstances of temporarily mandated remote work. Employers who elect to provide a fixed stipend to reimburse for anticipated remote work expenses should also encourage employees to submit reimbursement requests in excess of the stipend in the event that employees believe the stipend did not adequately cover all necessary business expenses. Alternatively, employers can establish a policy which permits employees to request reimbursement of reasonable and necessary business related expenses for each individual expense together with substantiating documentation. Employers can require that advance approval is provided before an employee incurs expenses that exceed a certain threshold dollar amount. 

The actual costs to an employer for reimbursing employees for necessarily incurred businesses expenses due to remote work are relatively small when compared to defending against a potential lawsuit. For businesses which continue to operate with a remote workforce, it is critical to understand how various labor laws may affect an employer’s obligations. If you have any questions regarding expense reimbursement or other COVID-19 related policy considerations, please contact Katchko, Vitiello & Karikomi, PC for additional information.

By Michael T. Karikomi, September 03, 2020

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