WORK FROM HOME LEGAL ISSUES – AVOID THE LAWSUITS
WORK FROM HOME LEGAL ISSUES – AVOID THE LAWSUITS
- Expense Reimbursement The Stay at Home Orders arising from the COVID-19 pandemic forced many employers to have employees work from home (“WFH”) and the WFH era is upon us. Having considered the cost savings, benefits and employee morale, many employers, large and small, intend to maintain the WFH workforce after the pandemic (whenever that may be).
Rule 1: If expenses drop an employee’s earnings below minimum wage, employers risk liability, including the possibility of a class action lawsuit.
Rule 2: If employers do not reimburse employees for all necessary business-related expenses, employers risk liability, including the possibility of a class action lawsuit.
Rule 3: Employers are liable for all employment related work injuries.
Employers are not relieved of the obligation to provide supplies and equipment to WFH employees to do their job. While courts and other governmental entities have not yet addressed some of the more unusual WFH expenses to our knowledge, some employers are providing bonuses or expense disbursements for items not normally directly paid to employees: coffee and tea, toilet paper, home internet access, personal cell phone, home office equipment, vehicle usage, utilities and office space at home.
In California, arguably the employment class action epicenter, employers must pay ALL expenses for an employee to do their job, even if not authorized. Some employers issue a stipend to cover expenses and ask the employee to provide the details and documentation if the employee does not believe the sum covers all employee WFH expenses. While the Courts have not said so yet, some lawyers have averred that employers must reimburse employees for home overhead expenses, such as utilities, rent or mortgage, and the cost of furniture. So, you can see where there is a window for class action lawsuits.
While the Tax Cuts and Jobs Act, passed in December 2017, eliminated the employee’s federal income tax deduction for most unreimbursed employee expenses for 2018 through 2025, employers typically can still expense most; if not all, of the expenses discussed above. So, it is not a bad idea for the employer to shoulder these expenses anyway (talk with your tax professional about this).
Regardless, employers should have a written policy signed as agreed by the employee, that outlines what is reimbursable and the process of how an employee is to be reimbursed, whether automatically in a stipend, via an expense reimbursement request from the employee or some other method. The policy should give guidance to the employee and require advance approval for expenses over a certain limit, along with a verification process for reimbursement of incurred expenses and deadlines for submissions. And, when an employment terminates, if an employee does not return equipment and other valuable items, the signed policy should give the employer authorization to deduct from the last payroll the value of any item not returned.
- WFH Policies Both employers and employees should have clear guidance on WFH work and communication expectations. Good WFH policies clearly reserve for the employer discretion to decide whether a job can be adequately performed remotely. And, the policy should address the fact that just because an employee is authorized to WFH does not excuse all of the employer’s normal policies dealing with everything from attendance to computer use policies to confidentiality/intellectual property issues.
Further, an employer is not excused from the obligation to maintain time records and to pay overtime. So, WFH policies should include a clear process for tracking employees’ work time. Some employers set specific work hours for each employee, including any lunch or rest breaks. But, while the schools are still wholly or partially on lockdown, employers may establish split workday hours to allow for necessary home schooling or childcare. Regardless of the issue though, there should be a clear policy for the process an employee uses to request an alternative schedule or absence.
Last, employers are liable for on the job injuries even if occurring at a remote worksite. Workers Compensation insurance may require employers to have clear guidelines setting forth safety expectations for use of equipment and the WFH workspace. Good practice may dictate that employers remind employees to maintain a safe workspace at home and practice the same safety habits as at the office or normal workplace.
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EPPS & COULSON, LLP
Attorneys admitted to practice in
California, New York, Colorado, Texas, Oregon, and Hawaii
Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney. While intended as informational and educational, it is considered advertising under applicable various laws of some states, and as such, Epps & Coulson, LLP encourages you to call us to discuss these matters as they apply to you or your business.