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In response to state and local COVID-19 stay at home orders, many California employers transitioned to a remote workforce to continue operating. Since that initial transition, some businesses have announced that some or all of their employees will continue to work remotely even after the pandemic is over.

Increased employee happiness and productivity, or decreased overhead and expense, are a few of the reasons listed by employers that are transitioning to a remote workforce.

While the benefits of transitioning to a remote workforce may be appealing and significant, California employers must be aware of several laws that impact remote employees.

First, employers must reimburse remote employees for expenses they necessarily incur in connection with the fulfillment of their job duties.

For example, if employees are indeed required to use their home Internet to work remotely, then an employer must reimburse their associates for a portion of the Internet expense they incur under California Labor Code Section 2802. The same goes for employees’ personal cell phones or landlines if employees must use them in connection with their jobs.

As one California court explained, the law is intended to prevent an employer from receiving a windfall by passing its operating expenses on to its employees. Hence, while a remote workforce may reduce an employer’s operating expenses, it cannot do so by shifting those costs to its employees.

An employer who fails to reimburse its employees for necessary business expenditures incurred while working remotely can face significant consequences.

The employer is liable for whatever expenses its remote employees incurred to fulfill their job duties, plus interest and attorney’s fees. In addition, the Labor Commissioner may seek to recover civil penalties against an employer that fails to reimburse its employees for necessary business expenses.

While the actual cost to an employer to reimburse its employees for necessarily incurred business expenses may be small and manageable, the costs of defending against a class action lawsuit — if enough remote employees are affected — or a Private Attorney General Act lawsuit to recover civil penalties on behalf of aggrieved employees, could significantly impact an employer’s exposure and expense.

All minutes count
Second, California employers must pay their remote employees for all time worked. When employees work from home and/or set their own working hours, an employer may be less able to monitor and record the actual time worked by those employees.

While the consequences of failing to track and pay an employee for a few minutes may seem (or be) relatively minor by itself, affected employees who pursue legal action are entitled to recover interest and attorneys’ fees for unpaid wages, which could significantly magnify the cost of failing to pay an employee for all time worked.

Moreover, as with a claim for reimbursement, the possibility of a class action lawsuit or a PAGA action could prove extremely costly to an employer that fails to accurately track its employees’ work hours and pay them for all time worked.

Data collection
Third, employers that use technology to monitor their remote employees may need to disclose their data collection and use practices to employees.

With employees working outside of an employer’s view, some employers may need to use technology to track employees’ work hours or productivity, monitor activity over company electronic resources or protect trade secrets and proprietary information.

Employers required to comply with the California Consumer Privacy Act (CCPA) must provide notice to employees regarding any personal information collected and how such information is used. Moreover, on Jan. 1, 2021, employers’ obligations under the CCPA will expand, unless the law is amended before then.

Currently, an employer who violates the CCPA’s data collection disclosure requirement may be subject to a civil action by the state attorney general. Although the CCPA includes a private right of action under certain circumstances in which employees’ personal information is unlawfully accessed by a third party, there is currently no private right of action by an employee for an employer’s violation of the data collection disclosure requirements.

However, an employee could seek a court order to make the employer comply with the CCPA’s disclosure requirements under California’s Unfair Competition Law, and then seek attorneys’ fees under statutes allowing the recovery of such fees in actions resulting in a significant public benefit.

For businesses that rely on a remote workforce, it is essential to understand how labor and privacy laws apply to such employees. Many of the laws require a relatively easy and cheap adjustment, while the consequences for violating the law may be significant.

This article first appeared in The Sun and other Southern California Newspaper Group publications online on Aug. 14, 2020. Republished with permission.

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