Some employers are adopting reimbursement policies as a worker benefit. Others must do so because of the laws in their jurisdiction. Do you know where your company fits on the spectrum?
Here's what you need to know about Amazon's lost bid to end worker lawsuit over work-from-home expenses:
- Worker preference for remote work isn’t expected to subside anytime soon.
- Full reimbursement of the costs might not be necessary.
- Employers should have an established written policy that expressly explains the work-from-home expenses for which they offer reimbursement.
Nationwide online retailer Amazon’s attempt to end a lawsuit by one of its workers to recover the expenses he says he incurred while working from home during the pandemic has been unsuccessful. A California federal judge recently rejected Amazon’s request that the case is thrown out of court.
Reimbursement for Remote Work Expenses
David Williams claims in the class action legal filing that the company violated California labor law requiring that employees be paid for work-related expenses. Williams said while working remotely, he and other workers used their:
- Personal phones
- Home internet
He said he incurred about $50 to $100 monthly in home office expenses.
The employees could not work at Amazon’s Silicon Valley office but were required to work from home following California’s coronavirus stay-at-home orders in early 2020.
The Judge’s take on the issue
In an order denying Amazon’s motion to dismiss the lawsuit, Judge Vince Chhabria said Williams had “plausibly stated a claim” under Golden State law to reimburse the expenses.
The judge rejected Amazon’s argument that the expenditures were the result of stay-at-home orders issued by the government rather than a decision by Amazon. Quoting California labor law, the court said that what mattered was whether Williams incurred the expenses as a direct result of the performance of his job or in obedience to his employer.
“That is sufficient to plausibly allege liability, even if Amazon itself was not the but-for cause of the shift to remote work,” the judge wrote.
The court said Williams had successfully alleged that doing the job required using:
- Physical space
Amazon also argued that the lawsuit should be dismissed because it never knew or had reason to know about the expenses the employee claims to have incurred. Williams hadn’t submitted a request for reimbursement or did anything else to notify Amazon.
Describing Amazon as a “major tech company,” the judge said the company had reason to know that Williams, a senior software development engineer, had incurred the business expenses.
The lawsuit is one of several filed against companies over the expenses incurred by workers while working from home.
Bank of America, Fox Broadcasting Co., IBM Corp., Liberty Mutual Insurance, Oracle Corp., and Wells Fargo reportedly have been sued over the issue. According to reporting by Reuters, several of the cases have settled, with employers agreeing to give remote workers stipends of up to $83 per month.
Some plaintiffs in the lawsuits are asking for reimbursement for the money they might have made had they been able to rent the space rather than use it for work.
Experts have estimated that an employee’s work-from-home expenses can add up to $50 to $200 a month. This figure includes expenses such as:
- Phone and internet services
- Heating and cooling costs
Expenditures for office supplies and furniture can increase the tab.
Some of the plaintiffs in the lawsuits are going even further. They are asking for reimbursement for the money they might have made had they been able to rent the space rather than use it for work.
Reimbursement issue for remote worker costs not going away
Many of the restrictions put into place because of the COVID-19 pandemic, such as the “stay-at-home” orders issued by state governors and city leaders, have expired, leading to the gradual return of workers to the office. But worker preference for remote work isn’t expected to subside anytime soon.
Many workers have expressed a preference for either:
- 100% full-time remote work or
- A hybrid work schedule that would involve some days in the office and some days working from home
According to the “2022 Connectivity and Mobile Trends” study from accounting and professional services firm Deloitte, 75% of remote workers and 50% of all employed adults preferred virtual or hybrid work options even after the pandemic ended.
In addition, almost half — 48% — of the 1700 U.S. workers surveyed by the Society for Human Resource Management (SHRM) said they will “definitely” seek a remote position for their next job.
Some companies, such as Google and Shopify, adopted policies early in the pandemic to address reimbursement of employee work-from-expenses. Both tech companies said they would reimburse employees up to $1,000 for the equipment needed to work from home.
Some employers are adopting reimbursement policies as a worker benefit. Others must do so because of the laws in their jurisdiction.
Federal law on reimbursement of work-from-home expenses
The federal government does not require that firms pay for the costs incurred by employees who work from home. However, there might be liability under the Fair Labor Standards Act (FLSA) in some instances.
The FLSA establishes federal minimum wage and overtime pay requirements, among other things. The FLSA doesn’t require that an employer reimburse employees for remote work expenses unless the expenses cause the worker’s pay to drop below the federal minimum wage, according to guidance issued by the U.S. Department of Labor.
The FLSA doesn’t require that an employer reimburse employees for remote work expenses unless the expenses cause the worker’s pay to drop below the federal minimum wage.
Employee business expense reimbursement is probably not required under federal law. However, several states, the District of Columbia, and the city of Seattle have employee expense reimbursement laws on their books.
State and city requirements for reimbursement of remote worker expenses
Jurisdictions with worker reimbursement requirements:
- New Hampshire
- New York
- North Dakota
- South Dakota
- Washington, D.C.
California and Illinois have been described as having particularly stringent employee business reimbursement requirements.
California law on worker reimbursement
The lawsuit against Amazon was brought under California law. Management-side California employment attorney Mark Spring has described California’s employee reimbursement law as strict but unclear.
Longstanding California labor law requires employers to reimburse employees for “all necessary expenditures or losses” incurred by the employee while performing their job duties or obeying the employer’s direction.
The law is aimed at preventing employers from causing employees to assume part of the business’ operating costs.
Full reimbursement of the costs might not be necessary. Courts have held that employers only have to reimburse a “reasonable percentage” of such costs.
In Amazon’s case, the judge wrote that “Amazon, a major tech company, surely knew or, at the very least, had reason to know that its software development engineers who worked from home during the pandemic were incurring basic costs related to that work.”
Spring wrote on the law firm’s blog that several court cases have indicated that “basic costs” include:
- Reliable access to the internet
- A phone
- A computer
But full reimbursement of the costs might not be necessary. Spring said that in rulings issued before the COVID-19 pandemic, courts have held that employers only have to reimburse a “reasonable percentage” of such costs.
“Based on current trends, California employers can expect to be on the hook for at least the “basic costs” of Internet usage, personal cell phone and laptop usage, and some utilities for workers that the employer requires or encourages to work remotely,” Spring said.
Golden State labor officials have not issued COVID-specific expense reimbursement guidelines.
A remote worker reimbursement policy
Legal experts say the lawsuits result from employers not having clear policies on reimbursing workers for work-related expenses incurred at home.
Employers should have an established written policy that expressly explains the work-from-home expenses for which they offer reimbursement. Employers should explain what equipment the company will provide and which expenses the company will pay, among other things.
Of course, the policy should be compliant with applicable state and local law.
If employers already have such a policy, they should review it to ensure that employees are appropriately reimbursed.
The new twist in business expense reimbursement is one of the many workplace changes created by the COVID-19 pandemic.