CDF Partners Todd Wullfson and Corey Cabral co-author the article "Expense Reimbursement Guidelines in California Have Acquired an Infection," for the OC Lawyer Magazine's August 2021 edition.
Excerpt: A major problem confronting employers with respect to the COVID-19 pandemic was the simple fact that they had no time to prepare. In February 2020, everything was business as usual. The next month, many businesses were faced with either shutting down completely or having employees work from home. Employers had no time to plan or think through all the payroll and employment compliance issues, which in a state like California, was like warming up a petri dish full of employment law liability infections. One very dangerous such potential infection was expense reimbursement guidelines.
Under the federal Fair Labor Standards Act (“FLSA”), there is no direct expense reimbursement requirement. The FLSA, however, may be implicated if an employee is forced to spend money on expenses necessary to work from home and the expenditure brings their earnings below the applicable minimum wage or cuts into overtime wages required by federal law. An easy solution for this issue is simply to provide the employee with the equipment necessary to work from home, such as a computer, printer, postage etc., or to reimburse the employee when they purchase necessary equipment or supplies.
A solution is less clear with respect to “mixed-use” items and services the employee uses for both business and personal reasons, such as a desk, chair, cell phone data plan, electricity, home internet, online services such as Zoom, and software programs. If the equipment or supplies are tangible, like a chair, upgraded WIFI router, or software, the employer can again, simply require the employee to request reimbursement (preferably in advance of the purchase), which can be evaluated and either paid or denied. Some purchases may involve the evaluation of medical information if, for example, an ergonomic chair or desk is requested as an accommodation (after all, a kitchen chair may work fine for limited computer use at home – but likely not if one is now working full-time at home). Employers need to document all reimbursed equipment, not only for accounting (they are a deductible business expense), but if the employer ultimately lets the employee keep the equipment, it may become a taxable event for the employee (as the equipment becomes compensation).
What about nontangible items and services?
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