Ask Rita: For What Work-Related Expenses Must I Reimburse Remote Employees?
When reimbursing remote employees, check state laws, whether the expenses are reasonable, and maintain good communication and flexibility.
What does the law require for remote work reimbursement?
Dear Rita,
In light of the Covid-19 pandemic orders in our state to stay at home, we have made the transition to our employees working remotely from their homes. This effort has been fairly successful despite the fact that we did not have a formal policy or practice of telecommuting before this.
We have allowed employees to take the computers they use at the office home with them to do their work and have asked them to use their personal cell phones for work-related calls. We have been advised that some employees are having connectivity problems with the remote access to our computer systems, and they tell us they need to upgrade to a more data rich—and more expensive—internet plan.
Do we have to pay for this expense incurred by the employee to upgrade their internet service to perform their work responsibilities?
Also, can you give us a general idea about what expenses we must reimburse for employees working remotely?
Signed,
We Have to Pay for What?
Dear Pay,
You are certainly not alone in dealing with this situation.
Many employers who never before entertained the possibility of maintaining a staff of remote workers have been forced to reconfigure their entire way of doing business to enhance their best efforts to protect employees, clients, and everyone else from becoming exposed to the Covid-19 virus.
This reconfiguration has resulted in a number of challenges, such as remote supervision, worker compensation issues, and wage and hour issues (for example, “Are my employees taking their meal breaks on time?”).
The question of reimbursing employees for work-related expenses predates this pandemic-induced shift to remote work, but the rapid increase in remote work has brought the issue to the foreground. Here are some things to consider when reimbursing employees.
Check with Your State Laws
The first consideration is, as always, what does the law require? Does your state require employers to reimburse employees for expenses incurred in pursuit of their job responsibilities? Some states do. Many others do not. If you are in a state that does not, then you likely need not pay employees for the use of their cell phones or other personal property, nor for any other expenses that arise as a result of working remotely.
If you are in a state that does require such reimbursement, then you will have to take a look at those laws. In California, for example, Labor Code section 2802 specifically says:
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 . . .
A number of other states have modeled their reimbursement requirements on this law. If your nonprofit is in one of these states, you would need to reimburse employees for any reasonable amount of work-related use of personal cell phones, or, indeed, an upgrade in their internet service, as I will discuss later. As another example, you would also have to reimburse the employee if, in an emergency situation, they pay for any repairs or maintenance to equipment you provided such as a computer, printer, or a fax machine.
Check Whether the Expenses are “Reasonable”
One of the challenges with the sudden and wide-sweeping shift to remote work is that employers may now find themselves involved in helping remote workers create entirely new workspaces where none were before: in their homes.
Equipping and operating a home office, essentially from scratch, can result in a fair amount of unanticipated expense for the employee—and potentially for their employer as well. For example, consider an employee who, prior to the conversion to remote work, did not have a desk in their home that would allow them to properly perform their job duties and who had no file cabinets for properly storing client files. If the employee is in a state where reimbursement is mandated, it is very likely that the employer would be required to pay for, or reimburse the employee for, these clearly work-related expenses.
One of the more frequent issues of reimbursement we see in the Covid-19 era is the “unconnected” employee now working from home. While many find this hard to believe, there are employees who, while using the internet with great familiarity at the regular workplace, don’t have internet service at their homes, whether for financial, lifestyle, or other reasons. Even more common is the situation when an employee’s existing internet plan doesn’t have the bandwidth (that is, data capacity) to handle the demands of the job, including the ability to support video conferencing, which has become the virtual equivalent of most necessary communication in the workplace.
It, again, is quite likely that the employer will have to pay for, or to reimburse the employee for, the enhanced but necessary internet service, as well as equipping the employee who has no home internet with sufficient service to enable them to properly perform their work responsibilities from home.
Of course, you are only required to cover, or to reimburse employees for, work-related expenses that are reasonable. You do not have to buy an employee a $10,000 desk or office suite when one that costs 10% of that or less is just as serviceable for getting the work done. Similarly, reimbursing an employee for new internet service or for enhancing the existing service does not require you to pay for anything the employee would use only for personal use. In other words, you can say no to Netflix, cable TV, and pay-per-view wrestling matches.
Maintain Flexibility and Good Communication
When it comes to handling any individual employee’s remote-work-related expenses, maintaining good communication and flexibility—as is the case with many issues that have surfaced in the Covid-19 era—with employees on the subject of expenses is the key to fairness and proper compliance. To streamline operations, consider also implementing a teleworking policy that covers all issues related to the expectations and obligations of both employers and employees.
With the coming of the pandemic, many things about our lives have changed. In the workplace, these changes include issues of great complexity and significance that are entirely new. When it comes to addressing the issue of reimbursing employment expenses, however, we are fortunate to have many tools already in place.
This column does not constitute legal advice.
About the Author
Mike Bishop is a member of the State Bar of California and has been admitted to practice in a number of federal district courts in both California and Ohio. During his legal career, Mike worked for 32 years with a Sacramento law firm, where he focused on employment litigation in both state and federal courts. During that time, he defended employers in litigation.
In 2016, he began his work as an Employment Risk Manager for the Nonprofits Insurance Alliance, assisting nonprofits in evaluating employment risks. Mike lives in Lakewood, Ohio, and is a graduate of the University of California, Davis, with a bachelor’s degree in political science, and a 1982 graduate of the University of the Pacific, McGeorge School of Law.
Articles on Blue Avocado do not provide legal representation or legal advice and should not be used as a substitute for advice or legal counsel. Blue Avocado provides space for the nonprofit sector to express new ideas. Views represented in Blue Avocado do not necessarily express the opinion of the publication or its publisher.
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