Bryan Little, Farm Employers Labor Service

May 19, 2023

Most ag employers are aware they are required to reimburse employees for neccessary expenses they experience in the course of their employment per Labor Code Section 2802:

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, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful.

The COVID pandemic cause a high-profile shift from daily workplace attendance to working at home in certain fields, particularly mainstream journalism, which lends itself to working more at home than some other jobs — like agriculture! That fact has drawn scrutiny to requirements to reimburse employees for fixed cost items like internet service plans, and to what extent employers must reimburse employees for some portion of the cost of a fixed-price internet plan.

The fact that agricultural largely continued to be performed on-site throughout the pandemic does not mean this heightened scrutiny will not impact ag employers, because the same principal applies to mobile phone usage and data plans.

In California, even when employees do not incur additional expenses associated with use of a mobile phone or data on an employee’s fixed-price plan, employers still must reimburse their employees for a reasonable percentage of that expense. The duty to reimburse employees for a portion of their personal data plan charges exists when the employees have no practical alternative to using their personal resources for business purposes, even if the employer does not maintain a policy specifically mandating the use of the personal resources or devices.

Although California Courts have not defined “reasonable percentage,” employers must reimburse employees for all expenses actually incurred for business purposes. Where the employee is paying a fixed amount for their mobile phone usage or data, the employer must reimburse its employees for the percentage of that cost that can be attributed to the employee’s mandatory use of the internet and/or their cell phone for work-related purposes. Alternatively, employers may elect to provide their employees with a company cell phone, and/or a device that also has unlimited access.

In order to fulfill their duty to reimburse employees for cell phone and/or Internet expenses they incur in the course of performing their duties, employers can either pay the employee’s actual costs as reflected on an invoice, or pay a flat amount that is sufficient to cover the portion of the employee’s costs that is attributable to business use. If employers elect to pay a flat reimbursement amount, they should confirm in writing that employees who believe that their business use exceeds the default reimbursement amount may request payment in a higher amount to correspond to their actual business use.

If an employer fails to reimburse its employees for the necessary business expenses that employees incur in connection with the discharge of their job duties, the employer can face a wage and hour lawsuit, and, if successful, the plaintiff can recover all reasonable costs, including attorney’s fees, incurred by the employee enforcing their rights, which can be significant. Additionally, if a company fails to pay its employees for necessary business expenses on a company-wide basis, the company may face a class action, or a claim pursuant to the Private Attorneys General Act (PAGA), or both.

What Should Employers Do Now?

• Review your expense reimbursement practices and update as necessary. In light of the reality that many employees must use their personal mobile phone and data connections to perform their jobs, employers in California should review their expense reimbursement practices to ensure they are reimbursing employees for all expenses that employees incur in connection with the discharge of their duties.
• Review the job functions of remote employees. In addition to mobile phone and data usage, employers should review the job duties of all employees to ensure that there are not any additional necessary business expenses that are being incurred which are not being reimbursement.

Remember, FELS is here to help! Please call us at 800-753-9073 or info@fels.net.