Employers in the state of California have experienced a significant increase in lawsuits in which employees seek reimbursement for expenses incurred while working from home. These lawsuits seek to replenish a wide variety of expenses related to rising utility costs and the costs of losing the ability to rent their home offices. Employees typically file these claims under section 2802 of the State Labor Code, although it is also common for employees to bring PAGA actions for “inaccuracies” in wage statements.
What does this entail?
Labor Code section 2802 determines that employers should reimburse employees for “all necessary expenses or losses” incurred by the employee while performing of his or her duties or “in accordance with the instructions of the employer.” It is important to note that article 2802 of the Labor Code clarifies that “necessary expenses or losses” include all “reasonable costs, including, but not limited to, attorneys’ fees incurred by the employee to enforce the rights granted for this article.”
Many California businesses still have employees who work from home or now use a hybrid structure. These employers should be aware of their reimbursement requirements under California law and review their telecommuting policies and agreements to ensure employees are being adequately reimbursed.
In many cases, the most common “basic costs” for employees include access to a stable Internet connection, a telephone line and smart devices or computers. Importantly, prior to the pandemic, courts held that employers were only responsible for reimbursing a “reasonable percentage” of expenses an employee could cover in connection with the use of a personal phone or internet costs.
Some of the new lawsuits also call for payment of potential income that employees could have earned if they had rented out their home office instead of using it for work. Although there is precedent for such cases, no public authority appears to support awarding such expenses in California, so it is unlikely that a court would find such theoretical expenses compensable.