California Labor Code section 2802 (“Section 2802”) requires employers to reimburse employees for “all necessary expenditures or losses” they incur as a “direct consequence of the discharge of … [their] duties, or … [their] obedience to the directions of the employer.”  So, in March 2020, when Governor Newsom issued a broad stay-at-home order requiring all non-essential workers to work remotely (if possible), questions arose about who should pay for any expenses related to this government-required remote work.  And, on July 11, 2023, in Thai v. International Business Machines Corporation, California Court of Appeal Case No. A165390, the California Court of Appeal for the First Appellate District answered this question.  In its published opinion, the Court held that employers are responsible for reimbursing employees’ necessarily-incurred remote work expenses, even when the only reason they are working from home is a government order.

The plaintiff, Paul Thai (“Thai”), sued IBM on behalf of himself and similarly situated employees, alleging IBM failed to reimburse employees for expenses incurred to perform their regular job duties from home pursuant to Governor Newsom’s stay-at-home order.  Thai argued that, to accomplish his job duties from home, he required internet access, telephone service, a telephone headset, and a computer and accessories, all of which were items IBM provided to its employees in its offices.  IBM argued that the Governor’s order was an intervening cause of the work-from-home expenses, foreclosing the allegation that IBM was the direct cause of the expenses and absolving IBM of liability under Section 2802.  The trial court sustained IBM’s demurrer, concluding the stay-at-home order was an “intervening cause precluding direct causation by IBM,” and entered judgment in IBM’s favor.

On appeal, however, a three-justice panel unanimously reversed the trial court’s ruling.  The Court explained that, per the plain language of Section 2802(a), an employer’s obligation to reimburse work expenses “does not turn on whether the employer’s order was the proximate cause of the expenses.”  Rather, “it turns on whether the expenses were actually due to performance of the employee’s duties.”  Thus, whether employees incurred business expenses while working at home following the government’s stay-at-home order did not change an employer’s reimbursement obligation under Section 2802.

Thai is a reminder that Section 2802 requires employers to reimburse an employee for all necessary expenses that are a direct consequence of the employee’s job duties, regardless of whether the expenses were directly caused by the employer.  Although government-imposed stay-at-home orders are, hopefully, a thing of the past, Thai has potential implications beyond the COVID-19 pandemic (or future pandemics).  And, while the California Supreme Court ultimately may need to clarify the law with respect to employers’ reimbursement obligations under Section 2802, until that happens, employers should consult with skilled employment counsel about their reimbursement obligations.

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Photo of Philippe A. Lebel Philippe A. Lebel

Philippe (Phil) A. Lebel represents employers in all aspects of employment litigation, including wage and hour, wrongful termination, discrimination, harassment, retaliation, defamation, trade secrets, and breach of contract litigation, in both the single-plaintiff and class- and/or representative-action context, at both the trial and…

Philippe (Phil) A. Lebel represents employers in all aspects of employment litigation, including wage and hour, wrongful termination, discrimination, harassment, retaliation, defamation, trade secrets, and breach of contract litigation, in both the single-plaintiff and class- and/or representative-action context, at both the trial and appellate level, and before administrative agencies.

In addition to his litigation work, Phil regularly advises clients regarding compliance with federal, state and local employment laws, and assists a variety of companies and financial firms in evaluating labor and employment issues in connection with corporate transactions. Phil also has experience assisting employers with sensitive employee investigations and trainings.  Phil also represents employers in connection with labor law matters, such as labor arbitrations and proceedings before the National Labor Relations Board.

Phil has assisted clients in a wide array of sectors including in the biotech, education, entertainment, financial services, fitness, healthcare, high-tech, legal services, manufacturing, media, professional services, sports, and staffing industries, among others.

Phil regularly speaks on emerging issues for employers and has been published or quoted in Law360, the Daily JournalThe Hollywood ReporterBusiness Insurance, and SHRM.org regarding a variety of labor and employment law topics.

During college, Phil worked on political campaigns in Atlanta, Georgia and Birmingham, Alabama, and was an intern with the National Gay and Lesbian Task Force and the Gay and Lesbian Victory Fund. Phil is a former member of the Board of Directors of the AIDS Legal Referral Panel.

Photo of Jennifer McDermott Jennifer McDermott

Jennifer McDermott is an associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration Practice Group and Counseling, Training & Pay Equity Practice Group.  Jennifer defends employers in a variety of labor and employment matters in…

Jennifer McDermott is an associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration Practice Group and Counseling, Training & Pay Equity Practice Group.  Jennifer defends employers in a variety of labor and employment matters in both state and federal courts, including wage and hour single-plaintiff lawsuits and class, collective, and Private Attorneys General Act (PAGA) representative actions.

Jennifer received her B.A. from UCLA, where she graduated summa cum laude and was elected Phi Beta Kappa, and she earned her J.D. from UCLA School of Law. While in law school, Jennifer completed a judicial externship for the Honorable Richard A. Paez of the U.S. Court of Appeals for the 9th Circuit. She also served as a legal writing advisor to first-year students and worked as a legal advocate at the Lanterman Special Education Law Clinic. Jennifer received a Dean’s Merit Scholarship, the B. Epstein and C. Kim Tax Law Scholarship, and two Masin Family Academic Excellence Gold Awards for the highest grade in Legal Research & Writing and Disability Law.