Working World

Some employees have requested to work from home part of week, which we see as mutually beneficial. However, some say they will need home Internet and computer upgrades. What costs do we need to cover? And what are some of the issues with managing employees offsite? 

Labor Code Section 2802 provides that “an employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties . . . ” This is fairly broad, but it is likely that the company should either provide the equipment and/or contribute to the cost of the computer, Internet connection and phone used to perform the job. 

Some issues that should be addressed in a written agreement with the employees are:

• How long will the arrangement last?
• How many days will the employee telecommute?
• How will records of hours worked be submitted?
• What equipment will be used and who will provide it?
• How will the employee be reimbursed for business use of personal equipment?
• Is the employee limited to a specified location?
• How will safety issues be addressed?
• How will the company and employee ensure computerized data will be secure?
• Will you require shredding of company documents discarded at the off-site location?
• How will the employee’s performance be evaluated?
• On what grounds can the arrangement be discontinued?

A recent case suggests that the employer may satisfy its business expense reimbursement obligation by paying increased base compensation or commissions. To do this, the employer must establish a means to identify the portion that is intended as expense reimbursement and the increase must fully reimburse the employees for all expenses incurred.

Increased compensation may have unwelcome tax consequences for both sides, however. Expense reimbursements are not subject to withholding for taxes, but wages are. So the tax consequences of increased compensation as reimbursement  should be addressed with an accountant beforehand.

Telecommuting can benefit employees, employers and the environment, but it will operate more smoothly if arrangements are addressed in detail beforehand.  

Amy Semmel is an attorney with the firm of Donfeld, Kelley & Rollman. Her practice emphasizes employment, trade secret and business tort law. The information discussed here is a general explanation of the law, and is not intended to serve as legal advice. Readers requiring legal advice regarding a specific situation should consult an employment attorney.