by Eric D. Morton
Employers may be be required to pay for the expenses of their employees working from home. In a recent California Court of Appeal case, the court determined that an employer was obligated to pay for some expenses of a home working employee. 
California Labor Code Section 2802
provides that employers must pay the employees for worked related expenses. An employee of International Business Machines (IBM) claimed worked related expenses from IBM after being ordered to work from home in 2020. The employee, Paul Thai, worked for IBM in March 2020, when he and other IBM employees began working from home. This was the result of government stay at home orders. Thai and other IBM employees incurred various expenses, including those associated with internet access, headsets and phone service, computers and computer accessories.
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’ following their employer’s directions.
Thai sued IBM for violating Labor Code Section 2802 by failing to reimburse its California employees for the business expenses incurred while working from home. IBM argued that Governor Newsom’s 2020 stay at home order was the cause and that IBM did not directly caused its California employees to incur business expenses. The trial court agreed but the court of appeal disagreed.
The Court of Appeal concluded that IBM’s argument was inconsistent with Section 2802’s plain language. The statute says nothing about whether an employer is the cause of an employee’s expenses. The only question is whether the expenses were directly related to the employee’s duties.
IBM argued that Section 2802 is intended to reimburse employees only for expenses that are “inherent” to the business, and that are incurred for the employer’s “benefit.” The Court of Appeal found that Section 2802 does not contain such limiting language. And, the Court of Appeal noted, even if such language could be read into the statute, the expenses the employees incurred were inherent to IBM’s business and the work the employees performed was for IBM’s benefit. The expenses were in direct consequence of the employees’ duties for IBM, the Court of Appeal concluded that Section 2802 applied.
IBM also argued that the expenses were “generally usable” items and, therefore, could not be covered by Section
2802. The Court of Appeal rejected this argument, and noted that when the employees worked in IBM offices, IBM
paid for these very expenses—the fact of working from home did not change IBM’s responsibility. Read the case here: Thai v. International Business Machines Corporation
Impact on employers
We urge employers to get ahead of this issue. Employers should review their policies and what they require of their employees when they work from home. We urge employers to understand what expenses employees might incur. Those employers should develop policies for reimbursement of reasonable expenses. The implementation of such policies will prevent unnecessary and potentially excessive claims.
- However, employers are not liable for dog food
Eric D. Morton is the principal attorney at Clear Sky Law Group, P.C. He can be reached at 760-72-6582, 510-556-0367, or emorton@clearskylaw.com