Employers are Required to Reimburse Necessary Business Expenses
In California, Labor Code § 2802 requires employers to reimburse employees for all “necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.” This rule exists because the State legislature recognized that, if allowed, employers will try to shift the costs of doing business onto their employees. Gattuso v. Harte-Hanks Shoppers, Inc., 42 Cal. 4th 554, 562 (2007).
To win a claim for unreimbursed business expenses, employees must show that (1) they incurred expenses or losses, (2) these losses or expenses were a direct consequence of discharge of their duties, or complying with the employer’s instructions, and (3) the expenses or losses were necessary.” Cassady v. Morgan, Lewis & Bockius LLP, 145 Cal. App. 4th 220, 230–31 (2006), as modified (Dec. 21, 2006).
Employers Often Try to Pass Costs of Doing Business Onto Their Employees
Employers have spent the past several decades concertedly trying to pass the costs of doing business onto their employees in order to juice their own profits.
Take, for example, the progression from a single work landline phone to work email accounts accessible on personal smartphones. Employers used to provide only at-work landlines to workers, who then were largely free from intrusion into their home life and time away from work. As personal electronics improved, employers decided that it was helpful to have employees who could be reached at any time. They paid for beepers, fax machines, Blackberries, etc. to facilitate their desire for constant availability from their employees. Employees paid nothing.
With the rise of smartphones, it became possible to have multiple secure email accounts on one device that most employees already owned anyway. From the employer’s perspective, this shift saved money. Where they used to have to pay for devices and data plans, now they didn’t. For the employee, the shift was not so great: employees had to buy fancier devices and more data so their personal devices could do double-duty as work phones.
The same principle applies to Uber, Lyft, and the debate about whether gig economy workers should be classified as employees. Taxi companies own taxis, which they provide to their drivers, whom they provide with dispatch devices, meters, and other tools necessary to do the job of a taxi driver. Uber and Lyft flipped this model on its head and required drivers to have their own cars, smartphones, and insurance, saving them immense sums of money versus the traditional model—but cutting into workers’ wages, some of which they must reinvest in Uber/Lyft’s business by buying gas, paying their cell phone bills, etc.
Employers Who Require You to Work Remotely Should Reimburse Necessary Business Expenses
How does this apply to the new world of coronavirus-related work-from-home orders? The answer is: it’s not totally clear.
Certain work expenses, like paying for high-speed Internet, seem “necessary” for most remote workers, meaning that employers should reimburse them or provide a stipend to cover expenses. You need access to work email, Zoom, Salesforce, or whatever cloud-based software your employer uses in order to do your job. It’s “necessary” from your employer’s perspective that you have high-quality home Internet these days.
Other expenses are less clear: what about air conditioning? Your employer is saving money by closing the office and paying for fewer utilities, but you are paying more because you’re home all day. If you aren’t allowed at your office, and you live in a place with hot summer climates that require air conditioning for comfortable indoor work, it seems “necessary” that you have air conditioning if your employer wants you to sit inside and be productive.
And what about reimbursement for using your home office space? Are you required to let your employer effectively co-opt a corner of your studio apartment living room, rent-free, because you aren’t allowed in the office? You had to buy a new desk because your back started to hurt from working on the couch – is your employer required to pay for that?
King & Siegel partner and co-founder Julian Burns King was asked about these timely issues by Refinery29.
King says that because of this law, “there’s a general consensus” in California at least that personal devices should be reimbursed when used for work. “But there’s this other stuff that no one has litigated before,” she says. “Do you have to be reimbursed for part of your home office? Or for your air conditioning, or for your internet?” States like Massachusetts, New York, Illinois, Pennsylvania, Montana, Iowa, and New Hampshire also have some version of a law on employee reimbursement, but such laws aren’t widespread yet, and the degree of requirement differs by location. “California is definitely one of the most protective,” says King.
Talk to a Top California Wage & Hour Attorney if You Have Further Questions
The answers to these questions are fact-specific and in flux based on the rapidly changing nature of work. If you have questions about your employer’s reimbursement policy, we encourage you to contact our top California employment attorneys for a free case review.
Julian Burns King graduated with honors from Harvard Law School and founded King & Siegel in 2018. As head of the Firm’s discrimination and harassment practice areas, she champions the rights of working parents and victims of workplace discrimination and harassment. She has been recognized as a “Rising Star” by Super Lawyers annually since 2018 and has recovered tens of millions of dollars on behalf of her clients.