(b) For purposes of this section, the term “necessary expenditures or losses” shall include all reasonable costs, including, but not limited to, attorney’s fees incurred by the employee enforcing the rights granted by this section. California Code, Labor Code - LAB. We cannot become your lawyers or represent you in any way unless (1) we know that doing so would not create a conflict of interest with any of the clients we represent, and (2) satisfactory arrangements have been made with us for representation. On one hand, sending untimely mass letters to employees may draw attention to the 60-day violation and prompt a lawsuit the employee was not previously considering. See Norton Rose Fulbright's additional COVID-19 resources. If an employer were to reduce only the hours of the highest paid workers, for example, such a practice may have the unintended impact of harming only older workers over 40-years-old and thus create the specter of age discrimination. Employers in the hospitality industry are bracing to engage in mass layoffs in light of the dramatic drop in foot traffic and laws that temporarily prohibit dining in restaurants. California Labor Code Section 2802 provides as follows: (a) An 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, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful. Please understand that merely contacting us does not create an attorney-client relationship. Employers must reimburse the employee within a time period “reasonable” under the circumstances. Both laws have complicated ways of calculating the number of employees based on their full-time or part-time statuses, as well as their tenures. 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 “reasonable” expenses. Determining the appropriate amount for a reasonable reimbursement is another issue. California Labor Code § 2802. In addition to the threshold 50-employee requirement, the federal WARN Act applies only if the number of displaced employees exceeds 33% of the full time workforce. This statute requires employers to reimburse employees for all expenditures necessarily incurred by the employee in direct discharge of duties for the employer, or in obedience to directions of the employer. (a) An 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, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful. California Labor Code § 2802 (“Section 2802”) requires employers to reimburse California employees for “all necessary business expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.” Its purpose is to prevent employers from passing their operating expenses to their employees. Use this page to navigate to all sections within Labor Code. California Labor Code section 2802 requires employers to reimburse employees, “for all necessary expenditures or losses incurred by the employee” while completing work duties. Employers facing Executive Orders to cease hosting large crowds immediately must comply. A judge trying to interpret the term “physical calamity” would look to a dictionary definition. But what if urgent circumstances do not allow for 60 days’ notice? Employers are reminded that laid-off employees are entitled to their final paychecks immediately upon separation. California does not mandate any deadline by which expenses must be submitted for reimbursement or paid. Visit our COVID-19 Hub for ongoing updates. There are state benefits that the employee may receive in light of this shutdown due to the coronavirus. As such, employers should be sure to implement programs to reimburse employees for such expenses as home internet, cell phone usage, printer ink, paper, and other relevant supplies. The Los Angeles employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP, filed a lawsuit against Silvercar, Inc., alleging the company violated Labor Code § 2699, et seq. To limit the effects of paying workers who have little work to perform, some employers are taking salaried employees “exempt” from the Labor Code’s rest break and overtime requirements and converting them to hourly employees to limit the amount of hours worked. division 4.5. workers' compensation and insurance: state employees not otherwise covered [6100 - 6149] The federal WARN Act is more forgiving of employers. The State of California has led the way in defining what employers are required to do when asking officers to bring their personal phones to work. Employers seeking to reduce labor costs temporarily sometimes use the euphemism “furlough.”  The term “furlough” has no legal or agreed-upon meaning in California. The general threshold for both the federal and California WARN Act is the layoff of 50 or more employees within a 30-day period. The WARN Acts are essentially designed to give employees and the government agencies advanced notice to prepare for mass layoffs. Yet if a company had 153 employees, a layoff of 50 employees would not pass the 33% threshold. If you are mandating telecommuting, consider California Labor Code Section 2802, which requires employers to pay for business expenses, such as cell phones, Internet usage and the like. California expressly rejected the hazy “not reasonably foreseeable” exception. The California WARN Act, by contrast, applies regardless of the percentage of employees retained and the anticipated duration of the layoff. Employees who challenge a mileage reimbursement amount set by the employer bear the burden in establishing their actual costs Yesterday, Governor Gavin Newsom signed AB1867 into law, which provides supplemental paid sick leave benefits for California workers. The underlying assumption of Labor Code Section 2802, Cochran, and Gattuso is that an employer provides employees with the equipment and resources necessary for employees to perform their jobs. This statute requires employers to reimburse employees for all expenditures necessarily incurred by the employee in direct discharge of duties for the employer, or in obedience to directions of the employer. Lawmakers are also planning soon to protect employee job status and health insurance coverage. Courts and the Division of Labor Standards Enforcement may be sympathetic to employers facing an immediate shut-down order. Coping with the outbreak of COVID-19 will require most employers and employees to make significant changes at work. California, COVID-19/Coronavirus, Employment Law, State Developments. 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 necessary equipment and resources for completing the job reimburse employees who use their personal … Employers may demand proof of incurred expenses. Recent Case Results. "It comes down to the necessities," Anderson said. In this regard, there may be uncertainty about whether employers are required to reimburse employees for expenses incurred to perform remote work. Id. Reports confirmed to Ogletree Deakins by an official from Immigration and Customs Enforcement (ICE) indicate that an initiative commenced on September 15 will result in over 500 new Notices of Inspection (NOIs) being issued to employers across the country. Some business closures have been mandated by law to take effect immediately. As the coronavirus situation is fluid, we encourage review of the EDD’s website at least daily relative to whether, and to what extent, benefits might be available. A: Under California Labor Code Section 2802, employers must reimburse employees for reasonable and necessary expenses that the employer “knew or … Some cities are now legally requiring employees to take “shelter” in their homes and not report to the employer’s place of business. What about printer ink costs? The new law, which adds section 248.1 to the Labor Code, provides coverage for employees who did not receive paid sick leave benefits under the federal Families First Coronavirus Response Act (“FFCRA”). The fact that the Legislature qualified the term “calamity” with the word “physical” may suggest that the calamity must actually cause damage to the body of employees or customers, or the workplace itself. Accordingly, please do not send us any information about any matter that may involve you unless we have agreed that we will be your lawyers and represent your interests and you have received a letter from us to that effect (called an engagement letter). Where the employer does not provide adequate equipment but expects the employee to work from home, the employer may be obligated to provide equipment (e.g., computer hardware and peripherals) or provide reimbursement for the equipment. That principle may encourage a judge to find reasons to lower the award of damages. The Cochran case expressly extended the expense reimbursement requirement to cover personal cell phone usage where the employer does not otherwise provide the equipment and/or a cellular plan. Those employers have a strong defense that it was legally impossible to comply with both the shut-down order and the WARN Act. Section 2802 operates to prevent an employer from passing its operating expenses to employees. For example, if an employee is neither required nor encouraged to work at home, the employer is not required to provide reimbursement for any expenses incurred by the employee. In response to “stay-at-home” orders issued by Governor Gavin Newsom and various California municipalities to prevent the further spread of the coronavirus (SARS-CoV-2) employers have been asking or requiring employees to work from home. This means that all employees who work for employers who have 500 or more employees nationwide can receive COVID-19 related supplemental paid sick leave under California law. 6201 still requires approval by the Senate and the President to become law. NOIs inform employers of the initiation of an I-9 audit and typically require employers to be. Only “necessary” expenses that employees incur must be reimbursed; expenses that are incurred voluntarily need not be reimbursed by the employer. Here, she describes how she laid a foundation for a successful diversity and inclusion program. Critically, during the furlough period all employees will continue to receive their health benefits. California Labor Code § 2802 (“Section 2802”) requires employers to reimburse California employees for “ all necessary business expenditures or losses … Because there is presently no clear authority on whether the COVID-19 crisis qualifies as a “physical calamity” within the meaning of the Labor Code, employers run a risk that a judge presiding over a WARN Act class action case disagrees and finds no “calamity.”  Conceivably, a judge could rule that layoffs were a mere option to stem business losses caused by lessened customer demand and not because of the actual contracting of a contagious virus, the number of victims which thus far total less than one-percent of the population. For more detailed codes research information, including annotations and citations, please visit Westlaw . California Labor Code § 2802: Employers’ Duty to Reimburse. Search California Codes. 3. The Cochran court held that when an employee must use a personal cell phone for work purposes, the employer must provide reimbursement for a “reasonable percentage of [the] cell phone bills.” In theory, depending on the circumstances, an argument regarding the reasonable rate of reimbursement for expenses related to employee use of internet services, personal computers, or printers could be made. California Labor Code section 2802 obligates employers to reimburse employees for “all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, …” The Cochran decision posed, and answered, the “threshold question” presented on appeal as follows: The California Labor Code – and, consequently, Section 2802 – only … Significantly, the WARN Acts require the employer to give the group of affected employees sixty (60) days’ notice of the layoffs. California's Labor Code requires employers to pay for "all necessary expenditures" workers incur in performing their jobs. Ogletree Deakins will continue to monitor and report on developments with respect to the COVID-19 pandemic and will post updates in the firm’s Coronavirus (COVID-19) Resource Center as additional information becomes available. With the COVID-19 pandemic triggering wide-spread restraint ... Because companies are not excused from compliance with the California Labor Code’s wage and hour ... See Cal. Employers should seek legal counsel for closer analysis if the headcounts are very close to the threshold. Hopefully, judges will not require bubonic plague-like infection statistics to deem the COVID-19 fallout a “calamity.”  Mitigating the employer’s exposure is the California WARN Act provision that an employer may argue its “good faith” belief that the 60-day WARN Act notice was not required. How about internet service? California’s law is Labor Code section 2802. The penalties for failing to properly reimburse employees for their necessary business expenses can be steep, as employees can be awarded reimbursement costs, PAGA penalties, and attorneys’ fees if they are successful. Employers considering mass layoffs or entire business closures should be aware of the federal and state Worker Adjustment & Retraining Notification (“WARN”) Acts. The EDD is reportedly expediting benefit payments in light of COVID-19. The cost of office supplies such as pens, pads, lamps, and furniture are not reimbursable unless the employer requires the use of specific types of supplies. On the other hand, a judge may view an untimely notice as better than no notice at all. (b) All awards made by a court or by the Division of Labor Standards Enforcement for reimbursement of necessary expenditures under this section shall carry inte… Exempt employees must be paid not only for actual work performed but for the entire workweek if any time was worked during that workweek. Labor Code 2802 In California, an employee is entitled to be reimbursed by his or her employer “for all the necessary expenditures or losses incurred by the employee in direct consequence of … This article provides employers with analysis and tips related to expense reimbursement of remote workers in California. The Solantic Corporation, class action lawsuit, Case No. Employers must also send WARN letters to the California Employment Development Department (“EDD”). $44,000,000.00 settlement for misclassified stock brokers Read On $7,200,000.00 settlement for cable installers who were not reimbursed for expenses and denied state mandated meal breaks and rest breaks Read On $4,250,000.00 settlement for employees denied state mandated meal and rest breaks and required to pay check cashing fees Read On California’s law is Labor Code section 2802. Many other laws found in the California Government Code, Public Utility Code, and Harbor & Navigation Code state that a “calamity” includes not only fires and floods, but also “epidemics.”  Because an “epidemic” is usually defined as the spread of disease, a judge should find that the spread of deadly COVID-19 and the drastic attempts to curb its spread qualify as an “epidemic” and thus a “calamity.”. Judges in a federal WARN Act case have the discretion by statute to excuse shortened notice given under the circumstances; judges in a California case apparently do not have as much discretion in that regard. Due to the coronavirus (COVID-19) pandemic, millions of employees who ordinarily work at an office or other workplace provided by their employers are now working at home.While you can no longer get a tax deduction for work at home expenses, here are some other ways you can get reimbursed for these costs, including as qualified disaster relief payments. In the face of the swift and dramatic changes to business operations caused by the pandemic, many employers transitioned some or almost all of their employees to working at home literally overnight. However, if the employee wants to upgrade equipment solely for the sake of convenience (e.g., get a bigger monitor, a wireless mouse, or a newer computer or phone), the employer would not have to reimburse for the upgrades because they are not “necessary” for the employee to perform his or her work. v. ABM Industries, Inc., a class action involving a California class of over 3,000 cleaning employees who claim that they were not reimbursed under Labor Code section 2802 for the expense of required use of their personal cellphones. Businesses that are faltering but not completely shut down face a bigger risk of not waiting 60 days to shutter or lay off workers. Dictionaries tend to define “calamity” in terms of the effects of distress or misery rather than actual events. However, an employer should certainly not wait more than 72 hours to tender final paychecks. In a previous interview, Michelle P. Wimes, Esq., the Director of Professional Development & Inclusion at Ogletree Deakins, identified challenges that diversity initiatives face and how to overcome them. Currently, California Labor Code section 2802 requires California employers to reimburse employees for necessary business expenses. A small minority of courts have held that reducing compensation and reducing normal hours worked could constitute a sufficient injury (“adverse employment action”) to support a lawsuit for discrimination or retaliation. Many employers are permitting employees to work from home as a preventative measure and to assist with child care as many schools have closed. In California, Labor Code section 2802 requires employers to reimburse employees for expenditures the employee incurs as a consequence of performing work. Read this complete California Code, Labor Code - LAB § 2802 on Westlaw FindLaw Codes are provided courtesy of Thomson Reuters Westlaw, the industry-leading online legal research system . All Rights Reserved. The federal law provides escape clauses for labor strikes, natural disasters, and even “not reasonably foreseeable” business circumstances. CONTACT, Javascript must be enabled for the correct page display, Important Rules for Employers to Know in the Wake of COVID-19. As changes are made, employers should be mindful of the following existing laws and new laws on the horizon. Making sure the employees had the technology to make the transition seamless was an initial priority. Unscrupulous lawyers are likely trolling the website for potential 60-day violators to sue. Section 2802 of the California Labor Code requires employers to reimburse their employees for the reasonable and "necessary" expenses they incur in direct consequence of discharging their job duties. As more employees work from home during the pandemic, expense reimbursement issues may arise and, potentially, evolve into claims underpinning Private Attorneys General Act (PAGA) lawsuits and/or class actions. ABM Industries, a janitorial service provider, recently agreed to a $5.4 million dollar proposed settlement in Marley Castro, et al. If the employee is free to choose from among different teleconferencing software or applications—there are numerous free software and application programs available—reimbursement would not be necessary. Reimbursement of Employee Expenses. Businesses depending on large gatherings may also be forced to consider reductions in force. Jathan Janove: You joined Ogletree Deakins in….. The mission of the California Labor Commissioner's Office is to ensure a just day's pay in every workplace in the State and to promote economic justice through robust enforcement of labor laws. ©2020 Gordon Rees Scully Mansukhani, LLP. 6201, which, among other things, will amend the Family and Medical Leave Act (“FMLA”) to allow 12-weeks of job protection for those who are self-quarantining at home, caring for an infected family member, or even having to watch over young children due to a school closure. To the extent employers are requiring employees to clock in/out using a cellphone app on their personal cellphones, reimbursement of a portion of the employee’s cellphone expense may be required. It can sometimes be difficult to determine which expenses, if any, employers must reimburse, and the amount of such reimbursements. Finally, the judge will likely then examine how other California Codes use the term “calamity” for guidance. Under section 2804, however, any agreement made by the employee is null and void insofar as it waives the employee’s rights to full expense reimbursement under [Labor Code] section 2802. Finally, the costs of postage, mail delivery, and messengers are not reimbursable except when required if a reasonable alternative (such as scanning, faxing, and email) does not exist. 20STCV41117, is currently pending in the Los Angeles County Superior … Employers required to reimburse employees for necessary expenses in growing number of states. Even if an employee is “furloughed” and only works a few hours per week, the employee is usually eligible for unemployment benefits from the EDD. While these standards don't apply in every state or country, employers should be aware of the standards currently being enforced in California, because history tells us that most U.S. states that favor the employee will be following suit. A Refresher on California Reimbursement Requirements in a COVID-19 World California Labor Code Section 2802 requires employers to reimburse California employees for “all … For example, if a company has 150 employees, a layoff of 50 employees would pass the 50-employee threshold and the 33% threshold. All employees may apply for unemployment benefits with the Employment Development Department (“EDD”). Who is submitting the receipt? In California, Governor Gavin Newsom waived the traditional one week waiting period for EDD benefits to kick in, thus providing employees with immediate relief. Must an employer reimburse remote workers for all cell phone usage since supervisors are calling employees at home? Expand sections by using the arrow icons. Whether a California court would extend the Cochran holding to internet plans where the employer does not provide a “hot spot” or to other expenses related to working from home remains to be seen. 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