Since the pandemic began two years ago, employees all around the world have learned how to work from home, setting home offices in their kitchens or bedrooms and perfecting the art of the video call. It hasn’t been easy, but most employees will say they’ve enjoyed the unexpected benefits of working from home such as foregoing their commutes and the ability to work from anywhere. However, there has been one unforeseen consequence of going remote: unreimbursed employee expenses.
When employees stopped going into the office, they needed employers to pay for all the things that helped them do their jobs at home. These include internet, home office equipment like a printer or webcam, office supplies, a work desk and chair and of course, a work computer. Now, employees are asking their employers to reimburse them for these expenses, sometimes going so far as to file lawsuits when companies refuse.
Unreimbursed WFH Expenses
Employees aren’t going to court over small sums of money. Between phone and internet charges, the extra electricity required and replenishing office supplies, a single employee could rack up several hundred dollars a month. For an employee who has been working remotely for the entirety of the pandemic, their employer could owe them thousands of dollars.
Some of the most common expenses employees are suing over include:
- Personal computer
- Office equipment (printers, scanners, etc.)
- Office supplies
- Utility bills
- Fair value for space used as home office
In court, the companies being sued have been arguing that the pandemic caught them off guard and unprepared to respond. While this may be the case, employees are arguing that the burden of these unanticipated expenses shouldn’t be placed on them.
Are These Lawsuits Likely to Succeed?
At the federal level, the Fair Labor Standards Act (FLSA) generally does not require that an employee be reimbursed for expenses incurred while working from home. Unless a failure to reimburse an employee for home expenses lowers their earnings beneath the applicable minimum wage, employers are likely not violating the FLSA when they don’t reimburse employees for these expenses.
However, several states do have statutes that require employers to reimburse employees for business expenses—including WFH expenses. These include:
- District of Columbia
- New Hampshire
- New York
The specific requirements vary from state. In New York, failure to reimburse employees is considered a misdemeanor crime while in Minnesota, employees only need to be compensated for certain expenses at the end of their employment.
In short, many of these lawsuits are likely to succeed in the courts, especially if the employees affected are in a state with a labor code that favors workers.
How Did This Happen?
At the onset of en masse remote work, very few employers adopted clear policies about reimbursing workers for work-related expenses at home. Some companies provided a stipend upfront to cover the costs of setting up a home office but didn’t offer clear guidance on continuing expenses. Some companies provided a blanket allowance, while some approved expenses on a case-by-case basis. Employees found this patchwork of different approaches confusing and left many employees footing the bill themselves.
Only 20-25% of companies are paying some of the cost for home office equipment and furnishings, and the items they will reimburse for aren’t consistent. Employers are much more likely to cover the costs of office equipment than internet fees, for instance.
What Can You Do?
The best thing your company can do to avoid any disputes over WFH-related expenses is to create a clear, easily understandable expense policy. Make sure employees know what is and isn’t reimbursable and how they can claim a reimbursement. When your guidelines are unclear, it opens the door for employees—and possibly even the courts—to offer their own interpretation.
CompanyMileage has created many resources on the subject of WFH expenses and employee expenses in general. As you navigate your WFH expense policies moving forward, we welcome you to utilize the articles below.
- Updating Your Expense Reimbursement Policy for a WFH World
- Mileage Reimbursement for Employees Working From Home
- The Hybrid WFH Employee Mileage Reimbursement Policy
- Update Your Travel Expense Policy to Reduce Company Spending
- An Improved Expense Reimbursement Process has Far-Reaching Benefits
- Download an Expense Policy Template