You're Going to Have to Pay for That: Court Clarifies Employers’ Obligations to Reimburse Remote Employee Expenses

During the pandemic, when all non-essential workers were required to work remotely, several questions arose about who should pay for the work-from-home expenses. Earlier this month, the California Court of Appeal determined in Thai v. International Business Machines that employers are responsible for reimbursing employees for those expenses, even when the only reason employees were working remotely was because of a government order.

California law requires employers to reimburse employees for all reasonable and necessary expenses they incur as a consequence of the discharge of their job duties.  In Thai, the employee had to pay for internet and telephone services and other items necessary to perform his job remotely. The employer argued that the stay-at-home order caused the work-from-home expenses, so it was not responsible for reimbursing those expenses. The Court disagreed and held that employers’ obligations to reimburse work expenses does not turn on whether the employer’s versus a government order caused the expenses. Rather, it turns on whether the expenses were necessary and actually due to the performance of the employee’s duties.

This case is a reminder for all California employers that they are required to reimburse employees for all necessary expenses that are consequences of their employees job duties, regardless of whether the expenses are directly caused by them.  For the time being, employers should focus on voluntary remote arrangements with employees if they want to reduce their obligation to reimburse employees for expenses related to remote work.  However, given the nuance in this area, we suggest reaching out to your labor counsel for guidance.

Stradling attorneys will stay on the lookout for any relevant updates. In the meantime, please do not hesitate in reaching out if you have questions or need assistance navigating those issues.