Hunton Employment & Labor Perspectives

In an effort to prevent the spread of COVID-19, many employers are permitting, and in some cases requiring, employees to work from home. One unforeseen consequence of requiring employees to work from home is some jurisdictions mandate that employers reimburse their employees for certain expenses incurred as a result of their employment. Accordingly, employers may be required to reimburse employees for reasonable expenses they incur for equipment and services necessary to work from home, such as cell phone, internet, and computer usage expenses.

For example, the State of California requires that “[a]n employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.” Cal. Lab. Code § 2802. Similarly, in Illinois, an employer must reimburse an employee for “all necessary expenses that are incurred by the employee within the employee’s scope of employment and that are directly related to services performed for the employer.” 820 Ill. Comp. Stat. Ann. 115/9.5. Minnesota, Iowa, New Hampshire, and the District of Columbia are among other jurisdictions that have similar reimbursement requirements. Therefore, employers in these jurisdictions should determine what expenses employees may incur as a result of working from home and determine if those expenses must be reimbursed.

Employers in other jurisdictions, however, are not off-the-hook with regard to potential liability related to business expenses incurred by employees working from home. Under the FLSA, no employer can require an employee to pay for the employer's business expenses if doing so would reduce the employee's earnings below the required minimum wage. The FLSA therefore requires all employers to reimburse their employees for any business expenses incurred that would bring their pay below the minimum wage.

Given these requirements, reimbursement of expenses is yet another factor that employers must consider when determining whether to allow, strongly encourage, or require their employees to work from home as the country seeks to curtail the spread of COVID-19.