Paying for the Benefit

“Over the past couple of years, I’ve had several employees working remotely and it’s working out great. Since they have their own computers and everything else they need, I’m even saving money. What’s not to like?”

Your HR Survival Tip

Some types of businesses or even certain departments within businesses haven’t done well with remote situations. However, even businesses who are enjoying a remote staff may find it’s not as cost-efficient as you think. Legally, you want to be sure you’re managing the remote worker situation correctly.

California courts and the Internal Revenue Service (IRS) have made it clear it should not cost the employee anything to work for you, other than the cost of their commute. California Labor Code 2802(a) states “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.”

What this means in non-legalese is that you are required to reimburse the employee when using the employee’s personal property or paid services for business purposes. Your company is considered to have received a benefit from the employee when your employee is willing to use their personal property… and you need to pay the employee for that benefit.

When you have remote employees, you are responsible for reimbursing each employee a “reasonable” amount. Of course, “reasonable” isn’t defined but don’t get too cheap. If that employee was in your offices, you’d provide a computer, high-speed internet, a phone, a desk and chair, and possibly a printer or scanner… and a place to work. When they are working from home you still need to consider all these items to avoid other problems, such as:

• A request for partial rent reimbursement because the employee didn’t originally plan to have a home office;


• Workers’ compensation claims for shoulder and arm aches because the employee doesn’t have a proper desk setup;


• Confidential information left exposed in the home office or a hacked home internet (which is 40% more easily hacked than most office internet systems);


• Failure to pay minimum wage because lower-paid employees weren’t being properly reimbursed for use of their personal equipment and services. The court will do the math to calculate wages minus missing reimbursements equal to less than minimum wage for that employee.

Don’t assume your company overhead dropped by thousands of dollars each month just because your office is totally remote now. You may save money by not needing to pay for as much office space but don’t skimp on reimbursing employees and making sure they have everything they need to properly do their job.