
Table of contents
- 1.Reimbursement for Remote Work Expenses
- 2.The Judge’s take on the issue
- 3.Similar lawsuits
- 4.Reimbursement issue for remote worker costs not going away
- 5.Federal law on reimbursement of work-from-home expenses
- 6.State and city requirements for reimbursement of remote worker expenses
- 7.California law on worker reimbursement
- 8.A remote worker reimbursement policy
- 9.Conclusion
Reimbursement for Remote Work Expenses
David Williams claims in the class action legal filing that the company violated California labor law requiring that employees be paid for work-related expenses. Williams said while working remotely, he and other workers used their:- Personal phones
- Home internet
- Electricity
The Judge’s take on the issue
In an order denying Amazon’s motion to dismiss the lawsuit, Judge Vince Chhabria said Williams had “plausibly stated a claim” under Golden State law to reimburse the expenses. The judge rejected Amazon’s argument that the expenditures were the result of stay-at-home orders issued by the government rather than a decision by Amazon. Quoting California labor law, the court said that what mattered was whether Williams incurred the expenses as a direct result of the performance of his job or in obedience to his employer. “That is sufficient to plausibly allege liability, even if Amazon itself was not the but-for cause of the shift to remote work,” the judge wrote. The court said Williams had successfully alleged that doing the job required using:- Physical space
- Internet
- Electricity
Similar lawsuits
The lawsuit is one of several filed against companies over the expenses incurred by workers while working from home. Bank of America, Fox Broadcasting Co., IBM Corp., Liberty Mutual Insurance, Oracle Corp., and Wells Fargo reportedly have been sued over the issue. According to reporting by Reuters, several of the cases have settled, with employers agreeing to give remote workers stipends of up to $83 per month.Some plaintiffs in the lawsuits are asking for reimbursement for the money they might have made had they been able to rent the space rather than use it for work.Experts have estimated that an employee’s work-from-home expenses can add up to $50 to $200 a month. This figure includes expenses such as:
- Phone and internet services
- Heating and cooling costs
Reimbursement issue for remote worker costs not going away
Many of the restrictions put into place because of the COVID-19 pandemic, such as the “stay-at-home” orders issued by state governors and city leaders, have expired, leading to the gradual return of workers to the office. But worker preference for remote work isn’t expected to subside anytime soon. Many workers have expressed a preference for either:- 100% full-time remote work or
- A hybrid work schedule that would involve some days in the office and some days working from home
Federal law on reimbursement of work-from-home expenses
The federal government does not require that firms pay for the costs incurred by employees who work from home. However, there might be liability under the Fair Labor Standards Act (FLSA) in some instances. The FLSA establishes federal minimum wage and overtime pay requirements, among other things. The FLSA doesn’t require that an employer reimburse employees for remote work expenses unless the expenses cause the worker’s pay to drop below the federal minimum wage, according to guidance issued by the U.S. Department of Labor.The FLSA doesn’t require that an employer reimburse employees for remote work expenses unless the expenses cause the worker’s pay to drop below the federal minimum wage.Employee business expense reimbursement is probably not required under federal law. However, several states, the District of Columbia, and the city of Seattle have employee expense reimbursement laws on their books.
State and city requirements for reimbursement of remote worker expenses
Jurisdictions with worker reimbursement requirements:- California
- Illinois
- Iowa
- Massachusetts
- Minnesota
- Montana
- New Hampshire
- New York
- North Dakota
- Pennsylvania
- South Dakota
- Washington, D.C.
- Seattle
California law on worker reimbursement
The lawsuit against Amazon was brought under California law. Management-side California employment attorney Mark Spring has described California’s employee reimbursement law as strict but unclear. Longstanding California labor law requires employers to reimburse employees for “all necessary expenditures or losses” incurred by the employee while performing their job duties or obeying the employer’s direction. The law is aimed at preventing employers from causing employees to assume part of the business’ operating costs.Full reimbursement of the costs might not be necessary. Courts have held that employers only have to reimburse a “reasonable percentage” of such costs.In Amazon's case, the judge wrote that “Amazon, a major tech company, surely knew or, at the very least, had reason to know that its software development engineers who worked from home during the pandemic were incurring basic costs related to that work.” Spring wrote on the law firm’s blog that several court cases have indicated that “basic costs” include:
- Reliable access to the internet
- A phone
- A computer
A remote worker reimbursement policy
Legal experts say the lawsuits result from employers not having clear policies on reimbursing workers for work-related expenses incurred at home. Employers should have an established written policy that expressly explains the work-from-home expenses for which they offer reimbursement. Employers should explain what equipment the company will provide and which expenses the company will pay, among other things. Of course, the policy should be compliant with applicable state and local law. If employers already have such a policy, they should review it to ensure that employees are appropriately reimbursed.Conclusion
The new twist in business expense reimbursement is one of the many workplace changes created by the COVID-19 pandemic.This article is for informational purposes only, is not legal, tax or accounting advice, and is not an offer to sell, buy or procure insurance. TriNet is the single-employer sponsor of all its benefit plans, which does not include voluntary benefits that are not ERISA-covered group health insurance plans and enrollment is voluntary. Official plan documents always control and TriNet reserves the right to amend the benefit plans or change the offerings and deadlines.
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TriNet Team
Table of contents
- 1.Reimbursement for Remote Work Expenses
- 2.The Judge’s take on the issue
- 3.Similar lawsuits
- 4.Reimbursement issue for remote worker costs not going away
- 5.Federal law on reimbursement of work-from-home expenses
- 6.State and city requirements for reimbursement of remote worker expenses
- 7.California law on worker reimbursement
- 8.A remote worker reimbursement policy
- 9.Conclusion