During the pandemic when workplaces were closed and employees had to work from home due to Covid-19 restrictions, employers were required to either provide the equipment needed to work from home (such as internet access and a computer/phone), or to reimburse employees for those costs. Case law interpreting Cal. Labor Code Section 2802 holds that employers cannot benefit from employees’ use of their own equipment, even if it doesn’t cost the employee extra to use their phone or internet. Bottomline: Some portion must be paid, typically in some sort of Work From Home or Phone Allowance. If you are doing business in California and haven’t been paying an allowance or reimbursing such expenses, watch out – such failure is ample fodder to entice a plaintiff’s counsel to file a class action or PAGA claim.
In litigation over expense claims, the question always comes down to whether the employee was required to use their own cell phone or computer, or whether it was the employee’s choice. Put another way, was it a “necessary expenditure” under Cal. Labor Code Section 2802(a)?
Employers are well positioned to defend such claims when they can show:
- Employees had access to everything they needed (including schedules and timekeeping) without using their own phones or computers; and/or
- There was a policy providing for expense reimbursement, and a policy prohibiting cell phone use or texting on the job; and/or
- They promoted expense reimbursement for phone/internet use, and have ample examples where it was actually paid.
Now that so many workplaces are returning to a hybrid model, with some days at home, and some days in the office, employers are faced with the question of expense reimbursement in a much murkier fact pattern. If the office is open, but the employee decides to work from home (and is allowed to do so), must expenses be paid, and if so, how much?
For employers who want to avoid litigation, there are some straight-forward options:
- Continue to pay some proportionate allowance for home internet and cell phone use to employees working partially from home; keep good records of those payments; or
- Provide a laptop with an internet or phone chip, and require your employees to use only that company equipment regardless of where they work; or
- Don’t allow anyone to work from home (as long as the applicable Covid-19 regulations permit it).
For less risk averse employers that want to take the position that working from home is optional once the office opens up, and stop all reimbursements (or never provided an allowance to begin with) – beware. Make sure you are well positioned to defend against claims for failure to reimburse by showing that you provided all necessary tools for work without any employee expense. If not, a PAGA claim could be in your future, which is good for us attorneys, but not so good for struggling California businesses.