We are finally in the phase of the Shelter in Place Orders where states and local governments are considering how to reopen the economy. As a result, many employers are planning to return telecommuters to the office. When the Shelter in Place Orders rolled out, employers were forced to make split-second decisions on the logistics of working remotely. There was little time to develop comprehensive telecommuting policies, including formal policies on expense reimbursement.
As a result, employers scrambling to keep the doors open—at least on a virtual basis—may have initially overlooked the reimbursement issue. As we’ve covered in other articles, California’s Labor Code requires employers to reimburse employees for “reasonable” and “necessary” expenses incurred while performing their job duties. Under normal circumstances, expenses incurred while employees work remotely for their own convenience are not typically reimbursable. However, while personal convenience remains a factor, certain employees working remotely during the Shelter in Place Orders presumably did so under the instructions of their employers. Such express instruction triggers the obligation to reasonably reimburse for known telecommuting expenses.
An employer who has yet to develop a policy on this issue can address the possible oversight upon an employee’s return to the office. One approach is to simply assume expenses were incurred and automatically pay them as follows.
Pay the Reimbursement in a Lump Sum
Where the employer believes an employee has incurred telecommuting expenses, the employer can estimate a reasonable amount so that reimbursement is made as promptly as possible. An employer exercising this option should provide a memo to the employee explaining how the stipend was calculated and direct the employees to contact a supervisor if the stipend is insufficient. The employer can request back-up documentation for expenses, such as cell phone and internet bills. Typically, late payment of expense reimbursements does not trigger waiting time penalties under Labor Code Section 203.
Create an Acknowledgment of Receipt of Reimbursement
An employer issuing an estimating expense reimbursement payment should document the payment with a written acknowledgment of receipt. Any such acknowledgment is not a settlement agreement and would not compel the dismissal of a Labor Commissioner complaint or civil lawsuit. However, an employee signature on an acknowledgment accompanied by payment of reimbursement makes such a claim much easier to defend. The acknowledgment should state the dates the employee worked remotely, the expenses the employee likely incurred on the employer’s behalf during this time, and the fact that the employee believes the reimbursement adequately compensates him or her for all expenses incurred while working remotely, whether mentioned in the acknowledgment or not.
The acknowledgment should also advise employees to contact their supervisors if they believe the reimbursement amount offered does not adequately compensate them for all expenses reasonably and necessarily incurred while working remotely due to Shelter in Place Orders. Lastly, the acknowledgment should be signed and dated by the employee.
Please reach out to your Cook Brown attorney with questions about necessary reimbursements for remote working employees.