Paul Thai was employed by International Business Machines Corporation (IBM) in March 2020, when Governor Gavin Newsom issued a stay-at-home order due to the COVID-19 pandemic. Thai needed internet access, telephone service, a phone headset, a computer and accessories in order to perform his work. IBM provided these items to its employees in its offices. After the Governor’s order went into effect, IBM directed Thai and several thousand other employees to continue performing their regular job duties from home. Thai and his coworkers personally paid for the services and equipment necessary to do their jobs while working from home. IBM never reimbursed its employees for these expenses, despite knowing that its employees incurred them.
Thai filed suit, on behalf of him and his coworkers, arguing that he should be reimbursed for these expenses under Labor Code Section 2802(a). The trial court disagreed with Thai and determined that IBM’s instructions to employees to work from home were due to government orders and therefore did not need to be reimbursed as necessary business expenses. Thai appealed.
On appeal, Thai argued that the trial court’s ruling was contrary to the plain language of Labor Code Section 2802(a), which requires employers to reimburse employees for all necessary expenditures or losses that are a direct consequence of the discharge of their duties. The Court of Appeals agreed with Thai.
The Court of Appeals reasoned that Section 2802(a) is designed to protect workers from bearing the costs of business expenses incurred by workers doing their jobs. The elements of a Section 2802(a) cause of action are: (1) the employee made expenditures or incurred losses; (2) the expenditures or losses were incurred in direct consequence of the employee’s discharge of his or her duties, or obedience to the director of the employer; and (3) the expenditures or losses were necessary.
The only element at issue here was the second element. IBM argued that Thai began to incur work from home expenses, not because his job duties changed, but because the government required him to stay at home. Therefore, IBM argued, they were not the direct cause.
Conversely, Thai argued that in a recent similar case in California involving Amazon, the federal trial court ruled that Amazon was liable to pay for the expenses because Amazon expected the plaintiff to continue to work from home after the stay-at-home orders were issued. This meant that Amazon had to pay the reasonable expenses incurred even if Amazon was not the “but-for” cause of the shift to remote work.
The Court of Appeals agreed with the Amazon case and likewise reasoned that even though the Governor’s order was the “but-for” cause of certain work-from-home expenses, there is no language in the statute that exempts an employer from the reimbursement obligation. Under the statute’s plain language, the obligation 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 the performance of the employee’s duties. The Court of Appeals reversed the trial court’s judgment and remanded the case for further proceedings.
Thai v. International Business Machines Corporation (2023) __Cal.App.5th.__ [2023 WL 4443934].
Note: This case serves as an important reminder that if employees are expected to work from home, even due to situations such as a COVID-19 exposure or a stay-at-home order, schools must reimburse employees for the necessary expenses they incur to perform their job duties.