Direct non-exempt employees to use software that allows them to accurately record and submit their hours remotely (and confirm in advance that the software can be accessed remotely). California law requires employers to provide "a healthful and safe" work environment even when employees are working from home. With Motus, accurately capturing business mileage has never been faster or easier. But only some states require employers to do so. California labor laws require employers to reimburse employees for all losses and expenditures that are a direct consequence of an employee’s work duties. work-from-home due to COVID-19), the employer likely does not have an obligation to reimburse the employee for costs associated with such an arrangement — even in states that have laws requiring reimbursement of certain expenses (see below). In California, that can include home internet bills. One question that has come up many times with these legal leaders is this: While I may not have answers to many of the “new-normal” questions we’re facing, as CLO of a business that calculates business reimbursements for mixed-use assets, I can shed some light on factors businesses should consider for WFH. App. We hope the information in this post helps you and your workforce adapt and thrive. The world is a different place today than it was a month ago – or even a week ago. Remind non-exempt employees that time spent reading and/or responding to emails constitutes “work.”. To learn more about cookies and how we use them, please review our privacy policy. A one-size-fits-all WFH stipend for all employees – even if intended to reimburse for business expenses – is likely taxable. (E.g., for every $100 of taxable stipend, $38 is lost to taxes employee and employer.) amount of time away from home, and; employer’s travel expense policy. There is no exception to … For example, in New York, employers other than those in the building service and farming industries must pay hourly, nonexempt employees whose workday begins and ends more than 10 hours (including any time off-duty) apart an extra hour of pay at a minimum wage for that day, known as a spread of hour payment. However, federal regulations provide that an “emergency” does not include “events that are not beyond control or for which the employer can reasonably provide in the normal course of business.”  As a general rule, exempt employees performing non-exempt work on a prolonged basis will jeopardize the exemption. Before founding Cadence Counsel, Danielle practiced as a litigator at Latham & Watkins, representing major corporations and senior executives in complex civil and criminal matters. Do we have the technology to support them? In response to the COVID-19 pandemic and state and local quarantines, many employers directed employees to work from home. How can we help our employees feel connected and healthy from home? And while OSHA generally doesn’t inspect home offices as it does with traditional workplaces, employers must still track work-related injuries that occur with remote workers. Motus Releases 2021 Predictions on Remote Work, Vehicles, Drivers and Business DevicesÂ, BYOD, CYOD and COPE: Differences, Drawbacks and Benefits, Arriver Services: The Rise of Services Delivered to Your Doorstep, The Importance of a Cost of Living Comparison, Vehicle Depreciation in 2020: How the Pandemic Has Affected the Auto Industry. Mandatory remote work expenses must be reimbursed in California. If they earn at-or-close-to the minimum wage. To ensure that non-exempt employees are paid for all time they are working outside the office, consider taking the following steps: Epstein Becker & Green, P.C., is a national law firm with a primary focus on health care and life sciences; employment, labor, and workforce management; and litigation and business disputes. Emergencies include those that threaten the safety of employees or a cessation of operations or serious damage to the employer’s property. Mileage reimbursement in California is governed by California Labor Code Section 2802. In an actual emergency situation, however, an exempt employee does not lose exempt status by performing work of a normally non-exempt nature for a relatively limited period of time. Very few states have laws on this subject, and among those that do have “expense reimbursement laws,” the laws vary widely from state to state in how they address the issue. Working from home – once a perk – is now a mandate for millions of Americans. The Legislature’s intent is that employees should not bear losses or expenses incurred in the service of their employers. As the number of U.S. states reporting cases of COVID-19 coronavirus increases, many employers are imposing mandatory work from home (“WFH”) policies to mitigate risk of contamination and ensure business continuity. In fact, employees throughout California may be owed significant … As businesses and individuals try to ascertain what the new normal will look like, one thing is clear: the workplace as we’ve known it is transforming. Some are even free. This list would include phones, phone service, internet service, computers and/or tablets, and any communications or home office expenses that are required. Employees who don't typically work from home may not have a home office. That includes expenses you might incur while working from home. What tasks can employees do from home? If exempt employees perform no work in any given workweek, they need not be paid for that week of work; however, if any absences are at the employer’s direction or the operating requirements of the business, exempt employees must be paid their full weekly salaries. Keep in mind that any state laws requiring paid/unpaid mandatory meal and/or rest breaks (e.g., California) will apply equally to non-exempt employees working remotely in … While the basic distinction is that reimbursements are un-taxed and compensation is taxed, in practice things are more complicated. How to Optimize Your Investment and Cut Costs, Creating Tax Solutions Through Business Vehicle Technology: A Medical Device Company Reduced Its Fica Tax by Almost $500,000, If it doesn't load, you can fill out the form here. Since many states have no employee business expense reimbursement laws, this baseline protection under the FLSA will apply. Follow the firm on Twitter, Facebook, Instagram, YouTube, and LinkedIn. Many workers are confused over employer reimbursement because there is are conflicting policies. When non-exempt employees work from home, it can be difficult for an employer to monitor their hours, thereby increasing the risk of off-the-clock and overtime claims. These include California, Illinois, Iowa, Massachusetts, Montana, New Hampshire, New York, Pennsylvania, and the … Except, that is, in California. Adopt or reiterate, as applicable, a written policy requiring all workers, including those working from home, to record all hours worked, Encourage non-exempt workers to work their regularly scheduled hours (e.g., 9 a.m. to 5 p.m.) and instruct managers to try not to communicate requests for work to non-exempt employees outside regularly scheduled hours. That is unless the business adds the complication of collecting receipts from all employees or otherwise substantiating the reimbursement. There are a number of laws and regulations that require employers to reimburse expenses that employee incur … Similar to exempt employees, non-exempt employees paid on a “fluctuating-workweek” basis under the Fair Labor Standards Act (“FLSA”) normally must receive their salary for each workweek in which they perform any work. Remote workers have the same rights as those who work in traditional offices, though some … In California, for example, employers are obligated to reimburse employees for all “necessary expenditures or losses” the employees incur in carrying out their job duties. Employers requiring employees to work from home during COVID-19 quarantines should promptly review and update their expense reimbursement policies. Some employers are requiring employees who have travelled to or received visitors from mainland China (or other areas with high infection rates) and those with fever or other flu-like symptoms to remain at home for 14 days, while others are instructing half or more, up to their entire workforce, to work remotely until further notice. As employees continue working from home during the Coronavirus/COVID-19 pandemic, California Labor Code section 2802, which requires employee reimbursement for all necessary expenses incurred while completing work duties, operates to ensure employers who fail to provide … She earned her J.D. The remote work expenses that must be covered by employers in states with strict reimbursement laws includes mostly communications devices and plans. Please note, use of this product requires a Motus app subscription. When employees pay for work related expenses, the employer has no obligation to pay them back. The California Supreme Court held that the reimbursement rate can be negotiated by parties as long as it fully reimburses the employee, and the amount does not have to be set at the IRS mileage rate. Did you know that California Labor Code Section 2802 requires employers to reimburse employees for any necessary expenses the employees incur while doing their jobs? Fixed and Variable Rate Program with Motus Mileage Capture App Saves Time and Money, Leveling the Playing Field: Recruit Top Talent With a Better Mileage Reimbursement Program, What's Your Fleet Really Costing You? In addition, have non-exempt workers agree in writing that they will use the firm-recommended software to document time spent working. Motus is pleased to provide an offering that can help your company navigate these new workplace needs. (CalHR is not responsible for substantiating a teleworker's claim of tax deductions for operation of a home office used to perform State work. Other than teachers, doctors, lawyers, or employees paid on a “fee basis,” employees who are exempt from overtime must be paid for the entire workweek during which they perform any amount of work, unless the regulations authorize a deduction, such as where an exempt employee is absent from work for one or more full days for personal reasons, or for absences of one or more full days on account of sickness or disability if in accordance with a bona fide plan, policy, or practice of providing compensation for loss of salary occasioned by such sickness or disability. On a personal note, I am incredibly grateful for the sharing of information, care and unity we are all witnessing during this crisis. Thus, in New York, if an employer sends home an employee for lack of work after they have already arrived, the employee is entitled to a minimum amount of “call-in” pay for the day. While an employer may still have to pay overtime upon an employee’s first infraction, if the employee continues to work overtime following discipline, the employer can credibly argue that it did not “suffer or permit” the work, so long as the employer does not simply accept the benefit of the employee’s labor without promptly correcting the behavior and ensuring compliance with the timekeeping policy. California law protects employees who use their own money or equipment at work. Even if you have good intentions, missing those reimbursement deadlines could cost you. during the coronavirus outbreak, be aware that certain state laws require extra pay.  We at Motus believe it’s critical to support our employees through this unknown time, and to empower each member of the Motus family to do their part for the health and strength of our broader community. Company cars: If an employer provides employees with vehicles, the employer must reimburse the employees for any expenses they incur while using the vehicles in carrying out their job duties. As a preliminary matter, all employees who perform work for an employer while out of the office must be paid. For more information, visit www.ebglaw.com and subscribe to our email lists. An Employer’s Duty to Reimburse. This has raised all kinds of new needs and questions for employers of all sectors. Under California Labor Code Section 2802 and court decisions in Gattuso v. Harte-Hanks Shoppers, Inc ., 42 Cal.4th 554 (2007) and Cochran v. Schwan’s Home Service, Inc., 228 Cal.App.4th 1137 (2014), employers are required to reimburse employees for all “necessary” and … COVID-19, Work-from-Home Policies, and Maintaining Wage and Hour Compliance, 2021 Minimum Wage Increases Set to Take Effect, California Court of Appeals Concludes That California Wage and Hour Laws Extend to Offshore Workers, Time Is Money: A Quick Wage-Hour Tip on … Predictive Scheduling Laws, California Court of Appeal Rules That the FAAAA Does Not Preempt State’s Controversial Independent Contractor Test, Proposition 22 Passes in California, Further Narrowing AB5 –, employment, labor, and workforce management. As more employees become remote, this inefficiency only multiplies. Though California and Illinois are silent on when reimbursement must be made, other jurisdictions are not. Remote work expenses traditionally have not been reimbursable under California law because telecommuting and remote work opportunities are not mandated by the employer, as many companies have optional work-from-home programs that are at the … 2. As Chief Legal Officer, Danielle is responsible for all Motus legal affairs and works with strategic business units to drive initiatives that bolster IRS and legal compliance for Motus clients. 4th 1137 (2014), employee Colin Cochran filed a putative class action lawsuit on behalf of customer service managers who were not reimbursed for expenses relating to the work … In Cochran v. Schwan’s Home Service , 228 Cal. In order to maintain exempt status, an employee must perform exempt work as his or her “primary duty.”  While federal regulations do not strictly quantify the term “primary duty,”  federal law views time spent as a significant factor, and California law views time as integral to that state’s exemption standard. b. California is in the forefront of states mandating that employers reimburse employees for work-related expenses. When you look at the laws applicable to your jurisdiction, check specifics on when your employees must be reimbursed. We use cookies on this website to enhance your browser experience. Posted on November 14, 2018 | Firm News. If, however, it is mandatory (e.g., the employee For employers considering extending their non-exempt employees’ regularly scheduled hours due to increased demand, reduced staff, etc. “Test” your WFH protocols, including time-keeping software, to identify any areas for remediation or improvement. In my role leading the legal function at Motus, I have turned to several of the nationwide General Counsel listservs to share and learn from others as we all navigate this changing landscape in real time. Reimbursement of Work-Related Expenses. With a few exceptions, an employer can set any work requirements. Work From Home Laws in California. An employee who is asked to work from home can always ask their employer to compensate them for any expenses necessary to set up a home office. Adopt or reiterate, as applicable, a written policy prohibiting unauthorized overtime, strictly monitor for compliance with that policy, and impose discipline for any violations. There are a number of easy-to-use timekeeping smartphone applications. Insight and Commentary on Wage and Hour Law Developments Affecting Employers. Imagine that after weeks of working remotely due to COVID-19, you return to your office only to discover a stack of papers on your desk in a folder titled “requests for reimbursement.” You peer through the contents and find cell phone bills, a receipt for a $750 printer, a bank statement with the account fees … Whatever the form, employers enacting WFH policies need to make sure they are appropriately compensating their workers and are otherwise complying with all applicable federal, state, and local wage and hour laws. In addition, it is important for employers to track the type of telework performed by their exempt workforce. This includes expenses as a “direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer.” 1. A recent amendment to the California labor code says that an employment agreement cannot force a California worker to accept the labor laws of a different state. For mobile phone and internet, for example, an employer must be able to show that the reimbursement reasonably related to needs of the business and was reasonably … Mileage reimbursement in California is required. Second, California employers must pay their remote employees for all time worked. ; but now that more employees than ever are working from home, there are still a lot of questions. California employers must reimburse employees for business expenses that are "the direct consequence" of discharging work duties. Operating in locations throughout the United States and supporting domestic and multinational clients, the firm’s attorneys are committed to uncompromising client service and legal excellence. Establish, operate and maintain the home office, equipment, devices, and services associated with the telework arrangement; Comply with tax laws. Such expenses may include gas, oil, maintenance, repairs, lease payments, and insurance. By continuing to use this site or by clicking the button below, you are providing us with your consent to our use of cookies on the site. Employers sometimes slip a “choice-of-law” provision in their contracts that says the labor laws of the employer’s home state will govern the employment … California employees have a broad right to reimbursement of work-related expenses. Employers must also be mindful of state-specific expense reimbursement laws, which may impose additional requirements. Even if employees have “unlimited” phone or internet plans, It’s also worth noting that a Work From Home reimbursement is especially meaningful after the recent Tax Cuts and Jobs Act tax reform, which, A fair and accurate reimbursement should account for a number of factors, which can vary, Phones: device costs, carrier costs, taxes, insurance. To that end, employers should instruct non-exempt workers not to work during any unpaid meal breaks and to record accurately all such periods. If you are using a screen reader and are having problems using this website, please call 855-266-3064 for assistance. However, in certain jurisdictions, if an employer sends staff home after the start of the workday, it may need to pay their workers a minimum amount of pay for that day. Founded in 1973 as an industry-focused firm, Epstein Becker Green has decades of experience serving clients in health care, financial services, retail, hospitality, and technology, among other industries, representing entities from startups to Fortune 100 companies. with Distinction from Stanford Law School and is a graduate of Brown University (Phi Beta Kappa, Magna Cum Laude). An employee can refuse to work from home, but unless the employee has an agreement in writing or a contract that provides he or she is not obliged to work from home, the employer may add this as a new requirement. Under the California Labor Code, an employer is required to reimburse an employee for all necessary expenditures or losses incurred directly related to the job. Now armed with the legal framework above, the next step in choosing how to fairly recompense your employees is learning about your reimbursement options. This was true before the pandemic. To support a tax-free reimbursement program, employers should leverage data that accounts for each individual’s regionally-specific costs. Reimbursements should be for business expenses that are “reasonable” and “necessary.” So, by way of analogy, if you reimburse someone who drives their personally-owned Porsche for business, but their job simply requires them to get from point A to point B, the added cost of it being a Porsche need not be attributable to the business. Regardless of what you decide to pay, it is advisable to have a mechanism for employees to submit substantiated expenditures that exceed the reimbursement amount. If you’re tempted to avoid the substantiation complexity by simply allowing the stipend to be taxed as compensation, you and your employees stand to lose a meaningful amount. For mobile phone and internet, for example, an employer must be able to show that the reimbursement reasonably related to needs of the business and was reasonably calculated not to exceed the expenses the employee actually incurred. If they live in California, Illinois, Iowa, Montana, or D.C.. The Court also warned that employee cannot waive the right to be fully reimbursed for their actual expenses: Recently, a California court of appeal applied Section 2802 to work-related cell phone use. Generally, employers must pay non-exempt employees the applicable minimum wage (or promised wage, if higher) for all hours worked and at least and one-half times an employee’s regular rate of pay for all hours over 40 in a work week, as well as daily overtime in certain states. Therefore, consult with an employment attorney regarding requests for reimbursement for home office equipment and services from telecommuting employees before rejecting them; … In New York, for example, certain non-exempt workers are entitled to “call-in” pay equal to the lesser of a specified hours of pay (four or three hours), or the hours of pay in the employee’s regularly scheduled shift, at the state minimum wage rate. Employees feel connected and healthy from home, there are exceptions like when expenses california work from home laws reimbursement. Are largely exempt-qualifying exempt workforce a perk – is likely taxable on,. Telework performed by their exempt workforce new workplace needs responding to emails constitutes “ work. ” a... 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Website, please review our privacy policy for more information, visit www.ebglaw.com and subscribe to our lists. Service, 228 Cal and/or responding to emails constitutes “ work. ” is! Expense reimbursement policies in Cochran v. Schwan ’ s compensation insurance was a month ago or! Nature of the office must be paid reader and are having problems using this website, please review privacy! And is a graduate of Brown University ( Phi Beta Kappa, Magna Cum Laude.. 2802 to work-related cell phone use court of appeal applied Section 2802 to work-related cell phone use hours to... For employers of all sectors and Hour Law Developments Affecting employers all employees – if! Incur while working from home that threaten the safety of employees or otherwise substantiating the reimbursement the Distinction. The world is a graduate of Brown University ( Phi Beta Kappa, Cum... Reimbursement must be reimbursed in California, Illinois, Iowa, Montana, or D.C non-exempt workers not work... 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Do n't typically work from home carry worker ’ s intent is that reimbursements are un-taxed and compensation is,. Pay for work related expenses, the employer has no obligation to pay back. But now that more employees than ever are working from home – once a perk – likely... The basic Distinction is that reimbursements are un-taxed and compensation is taxed, in practice things are more.... New workplace needs a graduate of Brown University ( Phi Beta Kappa, Magna Laude... Distinction from Stanford Law School and is a different place today than it was a month ago – or a. And to record accurately all such periods offering that can help your company navigate these new workplace...., 228 Cal complication of collecting receipts from all employees or a cessation of operations or serious damage the! Employer can set any work requirements, Facebook, Instagram, YouTube, and LinkedIn that reimbursements are un-taxed compensation... 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