Class Action Suit Highlights Need for Employers to Re-examine Expense Reimbursement Policies for Remote Workers

Ryan Greenberg – A few months into 2020, employers began abruptly closing their physical offices due to the growing threat of COVID-19. Suddenly, millions of U.S. employees were working remotely for the first time. By the end of the year, 71% of workers who said their job could mostly be done remotely were indeed remote “all or most of the time.” Fast forward to early 2022, and most of these workers don’t want to go back into the office, even as the threat of COVID-19 fades. Employers, more than ever, have been tasked with adapting and properly administering their expense reimbursement policies to employees who incur work-related expenses outside of the traditional office space. At least one large employer has allegedly failed to do so. 

Plaintiff, who was employed by Fox Broadcasting Company (“Fox”) as a Senior Financial Analyst, is suing Fox in the Superior Court of The State of California for The County of Los Angeles for (1) failure to reimburse business expenses in violation of California Labor Code § 2802 and (2) unfair competition in violation of California Business and Professions Code §§ 17200-17204. The complaint alleges that during the class period, the class members, at the direction of Fox and/or with Fox’s knowledge and acquiescence, incurred home office expenses including, among other things, home internet service and home electricity expenses in order to perform their necessary work-related duties, while working from home. The class members incurred expenses that usually varied from $50 to $100 per member, per month. However, Fox did not reimburse these expenses as required by law. The class is defined as “all . . . California residents who are or were employed by [Fox] and who worked from home when their offices were closed for at least one pay period from March 2020 to the present and ongoing.” Plaintiff estimates that the total number of class members, including current and former employees, is approximately 1,000.  

California Labor Code § 2802 requires employers to reimburse workers for “all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.” The section seeks to prevent California employers from shifting necessary expenditures of doing business onto their employees. Employees cannot waive their rights to reimbursements. However, expenses must be reasonable, as determined by the details and requirements of an employee’s job, and may be set by the employer’s reimbursement policies.  

California Business and Professions Code § 17200, also referred to as the Unfair Competition Law (“UCL”), in part defines unfair competition as “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act . . .” while § 17203 provides that any person—defined by § 17201 as “natural persons, corporations, firms, partnerships, joint-stock companies, associations, and other organizations of persons”—who engages, has engaged, or proposes to engage in unfair competition may be enjoined in any court of competent jurisdiction.  

In addition to having the lawsuit maintained as a class action, Plaintiff is seeking reimbursement of the relevant business expenses and restitution for the alleged violations. The total amount owed to the class, exclusive of attorneys’ fees, is estimated to be up to $2.9 million. The lawsuit is still in its infancy, the complaint having just been filed on February 24, 2022.  

One might dismiss Plaintiff’s complaint as a one-off lawsuit out of the country’s most pro-employee state. But employers across the country would be prudent to re-examine their expense reimbursement policies and practices, regardless of the case’s outcome. Under the Fair Labor Standards Act (“FLSA”), employers aren’t required to reimburse employees’ business expenses unless an employee’s unreimbursed business expenses bring their wages below the applicable minimum wage or cut into overtime wages. However, ten states and Seattle, Washington join California in requiring reimbursement of certain business expenses. Several other states require an employer to reimburse employees in a manner consistent with the employer’s written policies. Employers in these jurisdictions should be particularly careful about complying with applicable requirements. Even in jurisdictions that don’t mandate reimbursements, employers who force their employees to shoulder remote work expenses risk falling out of favor with their workforce at a time where employee loyalty is already at an all-time low.  

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