Over the past year many employers have implemented remote work options on an unprecedented scale. The success of this transition has made many businesses consider continuing remote work arrangements to some extent going forward. This may have many potential benefits to companies such as reducing costs and attracting talented workers. Employers, however, should carefully consider what additional responsibilities remote work arrangements may create, such as their responsibility to reimburse expenses incurred by their employees who work from home.
Under federal law, the analysis of when to reimburse work-related costs is fairly straightforward. Companies generally only need to reimburse employees for such costs to the extent they bring an employee’s earnings in a particular workweek below the applicable minimum wage and/or minimum salary threshold. This usually is only a concern where an employee earns close to the minimum wage or minimum salary threshold, or where an employee incurs a particularly significant expense in a workweek.
On the other hand, state laws (usually the state in which the employee has his/her home office) can impose a greater burden on employers. Some of these requirements are implicit in state laws, while others are explicit.
Many states have laws which could be construed as requiring employers to reimburse business expenses. For example, some states have laws restricting deductions from an employee’s pay. Having employees pay for normal and necessary business expenses and not reimbursing these expenses could be construed as a violation of such laws.
Other states have explicit laws requiring employers to cover employees’ business-related expenses. California, for example, requires companies to pay reasonable and necessary expenses that employees incur performing their job duties. This has been held to apply to expenses like an employee’s cell phone and home internet costs; even when the employee incurs no additional costs due to his or her business use, the company may be responsible for a reasonable percentage of these costs. While there are ways to avoid being responsible for these costs, these exceptions are only availble where a company takes the appropriate steps.
Allowing employees to work from home can have many benefits for employers. In order to avoid unexpected liability, however, companies should make sure to review their obligations to cover remote employee expenses, determine if there are ways to structure work from home arrangements to minimize responsibility for such costs, and enact appropriate policies and practices to address these issues.