California Employers Still Obligated to Reimburse Work-From-Home Expenses During COVID-19 Pandemic Order

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Earlier this month, the California Court of Appeal held in Thai v. International Business Machines (IBM) Corp. that even when governmental health and safety orders made working from home mandatory during the COVID-19 pandemic, employers may still be liable for necessary business expenses employees incurred while being required to work from home under California Labor Code section 2802.

California Reimbursement Requirements

California Labor Code section 2802 provides that “[a]n employer shall indemnify his or her employees 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.” Common business-related expenses that are eligible for reimbursement may include business use of a personal cell phone, driving costs for distance driven in a personal vehicle, postage, and training or education costs.

Facts in Thai

Plaintiff Paul Thai sued IBM under the Private Attorneys General Act (“PAGA”) for the reimbursement of costs associated with making his home equipped to accomplish his job duties, including internet access, telephone service, a telephone headset, a computer, and computer accessories. Previously, IBM had provided these items and services to its employees in its in-person office locations. However, after Governor Newsom’s Executive Order N-33-20 was signed in March 2020, Mr. Thai and other employees were directed to perform their regular job duties from home. Subsequently, Mr. Thai and his co-workers had to personally pay for the services and equipment. In his complaint, Mr. Thai claimed that IBM never reimbursed him or other employees for necessary expenses they incurred while working from home.

Trial Court: COVID-19 Order Was An “Intervening Cause”

The trial court sustained IBM’s demurrer (without leave to amend), concluding that Governor Newsom’s order was “an intervening cause of the work-from-home expenses that absolved IBM of liability under [Labor Code] section 2802.” The basis for their reasoning was that Mr. Thai and other employees were unable to allege that IBM’s instructions to employees to work from home were “the independent, direct cause” of employees incurring necessary business expenses.

Court of Appeal’s Reversal

The Court of Appeal reversed the trial court’s judgment for IBM by rejecting the application of a tort-like causation inquiry (including the intervening cause principle in a negligence action) in a section 2802 analysis. When reading the plain language of section 2802, the provision requires three elements for a cause of action: (1) the employee made expenditures or incurred losses; (2) the expenditures or losses were incurred in direct consequence or the employee’s discharge of his or her duties, or obedience to the directions of the employer; and (3) the expenditures or losses were necessary.

As to the second element, which was at issue in this case, the court reasoned that an employer’s obligation to provide reimbursement to an employee “does not turn on whether the employer’s order was the proximate cause of the expenses; it turns on whether the expenses were actually due to performance of the employee’s duties.” While it may have been true that Governor Newsom’s order was the “but-for” cause of certain work-from-home expenses, the court explained that nothing in the statutory language can be read to exempt such expenses from the reimbursement obligation. Additionally, the court reasoned that section 2802 “allocates the risk of unexpected expenses to the employer”, which is consistent with the legislature’s intent when it adopted the statute.

Ultimately, the court found that the expenses incurred by Mr. Thai and other employees were “inherent to IBM’s business” and that there was “no question that the work performed was for the benefit of IBM.” Even if the government order was the “but-for cause” of the work-from-home expenses, IBM was still liable under section 2802 for failure to reimburse the expenses.

Takeaways for Employers

If you are an employer based in California or if you employ workers from California, you should review your practices to ensure you are providing your employees with reasonable reimbursement, irrespective of whether they are working from home or not. Notably, the court in Thai did not consider a situation where employees choose to work from home despite the employer allowing them to work from the office. Thus, California employers may be able to continue arguing that voluntary work-from-home expenses are not subject to reimbursement under section 2802.

For more information on California’s employee reimbursement requirements, please contact us at

This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between MNK Law and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material.