In an opinion with vast implications for employers whose employees worked from home during the pandemic, a California court has held that - despite government orders requiring business to operate remotely (and to "exclude" many employees during the pandemic) - employers are liable for virtually all incidental expenses associated with working at home.
In the case, a worker operated remotely during the COVID-19 pandemic due to California Governor Gavin Newsom's executive order requiring residents to stay at home except as needed to maintain critical industry sectors. The worker remained working at home due to the order, later suing for penalties under California’s Private Attorneys General Act ("PAGA") for violation of Labor Code section 2802(a), requiring reimbursement of "all necessary expenditures" that were "incurred by the employee in direct consequence of the discharge of his or her duties.” These included expenses such as internet access, telephone service, a telephone headset, and a computer and accessories.
The employer argued that it was not responsible for (or the "proximate" legal cause of) such expenses as they were caused by the state government's stay-at-home order. The court rejected this argument, holding: "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."
This case will have two immediate consequences. First, it certainly will lead to myriad new PAGA claims based not only on home-based work during the pandemic but also on all hybrid and telecommute employment. Second, it will open the door into a broader question as to which expenses must be reimbursed (internet, heat, desk space, electricity, insurance, etc.) and what proportion of such expenses must be paid. Plaintiff attorneys are likely to rely on prior state caselaw regarding mobile phone expenses, requiring reimbursement even where phone use created no additional cost for an employee (e.g., when employees have an "unlimited" mobile plan or their phone costs are paid by a family member).
Employers should keep an eye on developments following this case and consider whether certain work-at-home costs ought to be reimbursed retroactively. This may require approaching employees and asking them to estimate the costs associated with working at home. There is no good guidance on this issue yet.
The case, Thai v. International Business Machines Corp., can be viewed here.