California Employers Must Pay COVID Work-From-Home Expenses

Employment Law

California employers must reimburse workers for their COVID work-from-home expenses, a panel of the state’s Court of Appeal has ruled.

To accomplish his duties for his employer, Paul Thai required Internet access, telephone service, a telephone headset, and a computer and accessories.

On March 19, 2020, Governor Gavin Newsom signed an executive order that directed, effective immediately, all individuals living in the state of California to stay home or at their place of residence, with limited exceptions.

Thai’s employer directed him and several thousand of his coworkers to continue performing their regular job duties from home. Thai and his coworkers personally paid for the services and equipment necessary to do their jobs while working from home and were never reimbursed.

In a Private Attorneys General Act (PAGA) action on behalf of the workers, he alleged that the employer failed to reimburse employees for their work-from-home expenses in violation of Section 2802(a) of the Labor Code, which provides:

“An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer… .”

The employer demurred to the complaint, and the trial court sustained the demurrer, reasoning that the Governor’s order was an intervening cause precluding direct causation by the employer.

Thai appealed and the appellate panel reversed.

Section 2802 is designed to protect workers from bearing the costs of business expenses that are incurred by workers doing their jobs in service of an employer, the court explained, and does not contain any causation analysis.

“The [trial court and the employer] read the statute as if it requires reimbursement only for expenses directly caused by the employer,” the court wrote. “But that inserts into the analysis a tort-like causation inquiry that is not rooted in the statutory language.

“Instead, the plain language of section 2802(a) flatly requires the employer to reimburse an employee for all expenses that are a ‘direct consequence of the discharge of [the employee’s] duties.’ Under the statutory language, the obligation does not turn on whether the employer’s order was the proximate cause of the expenses; it turns on whether the expenses were actually due to performance of the employee’s duties.”

It may be true that the March 2020 order was the “but for” cause of certain work-from-home expenses, but nothing in the statutory language can be read to exempt such expenses from the reimbursement obligation, the court explained, and Section 2802(a) effectively allocates the risk of unexpected expenses to the employer.

The court distinguished a California federal court decision that declined to hold an employer responsible for reimbursing an employee for the costs of personal protective equipment.

In that case, “the plaintiff’s need for masks and similar protective equipment was not a direct consequence of her work duties because those items were ‘generally usable’ personal items for which employers need not reimburse employees,” the court said. “By contrast, at issue in the present case are operating costs incurred by employees in performance of their actual work duties for [the employer] at home.”

To read the opinion in Thai v. International Business Machines Corp., click here.

Why it matters

The decision puts California employers on notice that they are required to reimburse employees for their work-from-home expenses during COVID. While the court did not define the boundaries of an employer’s responsibility, the employer did not dispute the costs at issue—Internet access, telephone service, a telephone headset, and a computer and accessories—were the types of expenses it paid for at its offices.



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