Reimbursing Remote Work Expenses

In California, Labor Code 2802 requires employers to reimburse California employees for "all necessary business expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties." So let's break that down further.

• If you ask an employee to take a client out to lunch — you need to reimburse the employee for their mileage and the cost of the meal. 
• If you ask an employee to go to the post office — you need to reimburse that employee for their mileage expense.
• If you ask an employee to work from home, using a company laptop and their cell phone to answer calls — you need to determine a reasonable reimbursement for the use of their internet and cell phone plan. 

Is an employer expected to pick up the tab for a nice leather, swivel office chair? Not so fast. Only items necessary for an employee's job performance are required to be paid for by the employer. Because an employee can perform their job duties at home on the couch, using a chair at their kitchen table or even on their bed (not recommended), an employer would not generally be responsible for furnishing an office chair.

An employer will need to reimburse employees for work items such as pens, paper, cellphones and laptops, if their use is required by the employer. Again, employers need not reimburse items purchased for the employee’s convenience such as a big screen monitor.

Note — if an employee's reasonable accommodation requires a particular chair or type of chair, the employer must provide that accommodation.

What about employers who are allowing a flexible work schedule? 

If your company is allowing employees the choice to work from home or in the office, a California court has held that employers need not reimburse employees for expenses incurred when they voluntarily work from home. However, be advised that if you are strongly encouraging employees to telecommute it may be difficult to argue that their expenses are not reimbursable.

Best Practices for Telecommuting Expense Guidelines:

1. Create a remote work or telecommuting policy that clearly outlines what equipment is provided and what the reimbursement rate for other necessary expenditures will be. CEA has a Remote Worker Fact Sheet and Checklist, as well as a sample Remote Worker Policy and Agreement available for members.
2. Reimburse employees for all reasonable and necessary out-of-pocket expenses incurred in carrying out job duties.
3. Provide employees with the necessary supplies and equipment to perform their job remotely (e.g., laptops, monitors, cellphones, office supplies, etc.)
4. Provide employees with a monthly stipend for a reasonable percentage of expenses when an employee incurs no additional cost on regular expenses such as their Internet and cellphone data plans. 

For example, if an employee's monthly cell phone bill is $100 and they are going to use their phone 40 hours each week/160 hours each month, do the math. With 672 hours in a four-week month, an employee is expected to use their phone about 25% of the time for work. As the employer, you could choose to pay $25/month towards their phone bill each month — or look like a hero and pay for 50% of the bill! If the reimbursement you provide is considered insufficient by an employee, implement a procedure where an employee may request additional reimbursement with supporting documentation. This type of an exception provision is critical because employees should always be allowed to "prove up" additional incurred expenses.

Give examples of items that are not necessary for the performance of job duties, such as office furniture, and make clear that employees will not be reimbursed for these types of items without prior approval.